Jay –
Point of control is where the more weighty transactions take place for any given instrument. While there is no guarantee that those areas will be revisited in the fashion I noted earlier, but the probabilities are very strongly weighted they will. That is due in part to the fact that large orders from large institutions/entities transact there. This is based on decades of factors of input for analysis, with the result being solid in terms of probability. One of the better forms of imagery I could compare it to is a volume profile. Be advised, this is not a volume profile and you will not find it there. But in some ways there are similarities. Having it is step one. Step two is application that actually works. Requires dedication.
UsdCad 3620 (which is current market) is the point of control in spot, with 7350 the point of control in futures for Canadian Dollar (which is current market). Regardless of how markets behave up or down, these price levels will be revisited in August. My preference is the sell side in spot in the 3680-90 zone at present if/when seen.
I prefer to be on the sell side of UsdSwiss Franc for risk management purposes into the weekend.
A German defense industry executive of a major producer of tanks and weaponry, some of which has been shipped to Ukraine, was the target of a Russian assassination plan in recent weeks which did not play out. When I learned of this I made some phone calls to some old friends and there is legitimate unease within military/defense circles at present. Moscow has been engaged in cyber attacks, espionage, sabotage, and one aggressive act not publicized in media.
The situation is escalating in Eastern Europe and should be watched closely as it is clear Moscow has zero apprehension to escalate. One event would cause Euro to shock currency markets to the downside. At present, some NATO member countries are only paying 60% of their required defense contributions while the US has a dysfunctional Congress and no President or Vice President.
I will likely sell UsdCad around 3670/80 if seen.
The US and Canada signed revised the 60 year long standing treaty today whereby Canada received 50% of hydroelectric power generated by the Columbia River Dam and will receive 40% less of that amount going forward beginning in August. The revision was in response to population demand in the US over time. Hopefully this counters the graveyard of US oil/gas permits and related production in the US since 2020 and helps to reduce prices a small bit, which obviously soared virtually out of control in recent years. The treaty (get this) can be unilaterally revised or terminated by either country as of September and/or for the life of the new 20 year term. — One month. Oil/gas data up 10am PST.
EurGbp – staying on the sell side from 8920 holds good R/R, you can forgive yourself if the bias changes. It would require fierce buying over 8940 to change the bias.
This is a good time to revisit this article assuming it was the BoJ intervening these past 2 days
Trader Alert: Will the Bank of Japan Intervene and Does Forex Intervention Work?
USDJPY ONE HOUR CHART – INTERVENTION DOUBLE BOTTOM?
This is why I love The Amazing Trader
In the heat of battle, if inf act this was another round of intervention, I ran to the chart and as I posted, saw the low yesterday was 157.41
Last now at 158.12
Data on deck
US PPI and Univ of Mich consumer sentiment where inflation expectations will be the focus
Forex Forum Ad Hoc Glossary
What is Risk Management in Trading – Forex Forum
For any trader, managing risk is essential to success. But what exactly is risk management? In this blog post, we’ll explore what risk management is and how it can help you become a successful trader.
We’ll also look at some common mistakes that traders make when it comes to managing their risks. After all, if you’re not managing risk appropriately, you’re just a gambler. So if you’re ready to learn more about risk management, read on!
What is Risk Management in Trading?
Risk management is the process of assessing, controlling, and managing risk within a trading portfolio. This involves defining trading goals and understanding potential losses that could occur as part of the trading process.
It also includes identifying potential risks, such as market volatility or sudden changes in the market, understanding how these risks can affect your profits, and taking steps to limit potential losses.
In general, risk management should be a priority for all traders. By properly managing your risks and using effective strategies, you can minimize potential losses and increase the chances of making successful trades.
Common Mistakes When Managing Risk in Trading
Unfortunately, many traders make mistakes when it comes to managing their risks. Here are some of the most common mistakes that traders make when it comes to risk management:
Not Setting a Trading Plan:
Many traders don’t have a detailed trading plan, which is a key component of risk management. Without a trading plan, traders are more likely to take risks that could have otherwise been avoided. It’s important to establish clear trading goals and a plan for how to reach those goals.
Not Understanding Risk:
Many traders fail to understand the risks associated with certain trades, which can lead to serious losses if they don’t take the time to research and understand the risks involved. It’s important to have a thorough understanding of the markets you’re trading in before taking any risks.
Not Taking Advantage of Stop Losses:
Stop losses are an essential component of risk management, as they help to limit potential losses in the event of a market downturn or sudden changes in the market. However, many traders don’t take advantage of stop losses and end up taking larger risks than necessary.
Over-Trading:
Over-trading is a common mistake made by many traders. This involves taking too many trades, which can lead to losses if the market turns against you. Look, all traders love the price action. It’s exciting to take a position and watch your P/L go up and down. But don’t become addicted to the price action for the sake of just having a position. It’s important to only take trades when the setup is right and avoid over trading.
Not Diversifying Risk:
Diversification is another important part of risk management. By diversifying your trades, you can spread out risk and limit potential losses if the market turns against you.
Why is Risk Management Important in Trading?
Risk management is a critical factor in success when trading in the markets. It involves understanding and controlling what could potentially impact your trades and actively analyzing scenarios that may occur.
Without proper risk management, traders are leaving themselves vulnerable to potential losses which could be catastrophic for their investments.
Good risk management also allows traders to effectively assess opportunities and make better decisions that take into account volatility or leading indicators of future market performance.
Simply put, risk management can provide peace of mind so traders can enjoy the highs of profitable investments while minimizing losses when markets start to dip.
What are Some Common Risk Management Strategies?
Common risk management strategies used by traders include setting stop-loss orders, limiting capital exposure, and diversifying investments to minimize volatility.
Another essential approach for traders is to set predetermined targets for both profits and losses to help stabilize your exposure. To further limit potential losses and maximize gains, traders should always be aware of economic news and other world events that might affect the market.
How to Implement Risk Management in your Trading Plan
Implementing effective risk management into your trading plan is incredibly important for successful and profitable trading. It can help you to control the amount of draws you take in any given trade, and it can also protect against large losses which could potentially wipe out your entire trading account.
A good risk management plan should include determining the amount of capital at risk on each trade, setting predetermined stop-losses to limit downside exposure, and having a strict, disciplined approach towards minimizing losses:
never increasing position size
never risking more than you are comfortable with, and always controlling potential risk-reward ratios.
Taking the time to set up a comprehensive yet flexible risk management plan will put you in a better position when it comes to positive returns in the long run.
Risk management is an important part of trading. It allows you to trade with less stress and more confidence. There are many different risk management strategies, so it is important to find one that fits your trading style.
Proper risk management can help you make money in the long run by preserving your capital and preventing you from making careless mistakes.
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