After the House refused to pass the bill in a bi-partisan manner we saw market participants run for the hills to the tune of a 777 point drop on the DOW. It was quite the day.
Did I forget to mention that the VIX closed at a new high? I even think I saw pieces of the sky fall!
After all of this, I've been watching the carry trades decline precipitously as money was shunted back into Yen as a protective measure.
I don't know about you, but when I see so much hysteria and panic I'm motivated to look for a place to stick my toe into the market. Sure, wait until there are some technical signs to back the decision, but with a tight stop you don't have to put anything significant at risk.
In short, at least with respect to the Forex markets, you control how much risk you are willing to take explicitly. Don't be afraid to look hard at the situation and see if you can find a good risk vs reward ratio. Panic is a sign that it's time to pay attention.
Could the market fall another 700 points? Sure. Could it recover due to some type of new emergency plan? Sure. There's always a winning trade in the Forex markets. Figure out what it is. Find a way to gain entry without much risk. Sit back and see if things change, continue or go sideways.
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