Forex Trading Mind

The markets came back to life yesterday, with

I was doing some research on how long losing streaks are likely to be when you are trading Forex. There are many reasons why this is important information, especially if you are trading mechanical systems, as it helps you know how much cash you should be risking on each trade – at least at a maximum. The results of the research illustrate an important point that is worth taking a close look at.

Well, it’s the day after Christmas Day but a lot of people are still on holiday, either because the day after Christmas Day (known as “Boxing Day”) is a holiday in some countries, or because Christmas Day fell on a Sunday so the next weekday is given as a holiday in lieu (this is what is happening in the United States today).

While reading the news earlier today, I saw a guru at UBS make a client-directed market forecast which seemed reckless and irresponsible to me. I’ll get into the details a little further on. This rang a bell in my head, and checking back to my post of 29thNovember, I wrote about another guru, also at UBS(!), who made a similarly ridiculous Forex forecast: that the USD/JPY currency pair would stand at 98.00 by “this time next year”.

One of the most straightforward and well-proven ways to trade is to follow trends, buying dips in uptrends and selling rallies in downtrends. The beauty of trading in this way is that, although it can lose money in the short term, if you follow some precautions and let your winners run, it is the easiest way to make money over the long term.

The big day is finally here. The Federal Reserve has a 95% of hiking interest rates by 0.25%, and will also announce its forecasts for the U.S. economy over coming months.

There is a fair amount of profit-taking ahead of the long-awaited FOMC meeting release tomorrow, which the market sees as having a 95% chance of producing a hike in the Federal Funds Rate of 0.25%. This leaves the markets overall flat.

The most interesting news within this weekend’s cycle has been