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Stop Trading the Fed Funds RateThe fed usually hikes into growth and eases when it realizes the economy is too weak to absorb the impact of the hikes, so historically stocks usually rise as the hiking begins and crashes when the fed takes their foot off the pedal. This time the fed is late. They hike as the housing market is brought to its knees and the economy is slowing. Equities are down, but this is not due to recession expectations. The bond market has reacted to rate hikes, bond yields rise, the discount rate affects the equity market by eating away at their earnings targets. The higher the yield is, the more your company has to make than that in growth to give incentive to invest in it over just holding fixed income. Rate hikes have many systemic effects like this that increase the cost of credit and directly impact the equity market. If you're holding risk assets you're better off with the Fed holding the line with the hikes in the short term. In the longer term we are screwed no matter what levers the fed pulls. Monetary magic can not save the economy now. Easing or slowing the hikes (which isn't my prediction, but a market's hope) would be a signal to another group of market participants that we haven't seen sell anything yet who are trading based off of what easing signals. So far equities have only reacted to changes in the discount rate. They have not started pricing in a recession and current price action is a bet on temporary economic contraction with no hard landing. Three different recession, three different initial conditions, same market behavior: The probability of a soft landing is zero percent. The mystery of this market isn't the direction it's how low it's actually going to go. The more funny retail money enters this market, the higher the chance we could see unprecedented drawdowns far worse than anyone so far has expected. Everyone in retail, their aunt, uncle, grandma, and dog, is trading speculatively based off the fed funds rate. They believe that a change in the pace of hikes or basis point increases will breathe life into the economy. They have not traded a market like this before. If you think the economy can recover without a crash, park into cash and sit this one out. Stop listening to these talking heads in mainstream media telling you everything will be ok. You are the customer and the product holding up their portfolio as they exit leaving you holding the bag.
AMEX:SPYShort
by coinhoIio
2
Inflation Rate against CPI IndexAs you can see - all crashes on SPX have been synced with the above chart dipping big time. What do we have now ? The chart hasn't even gone down - yet SPX has dipped -27%. The difference between SPX's TOP and the start of declining of Inflation Rate / CPI is of an average 15-18% decline on SPX. The only problem is that we haven't even started properly declining (circled area). Two assumptions based on this - Either we still have time in this market and this was just a correction... or... ... the fall will be huge. Personally expecting markets to recover a bit and soon inflation rate will spike down together with SPX falling. Not investing big time before seeing a proper spike down. Cheers!
ECONOMICS:USIRYY
by TheSecretsOfTrading
EUR/GBPMaybe a potential short trade for the EUR/GBP? - BoE is bound to come with a 75 Basis point increase on the interest rate Thursday . - England are experiencing way tougher inflation than the European regions. - RSI are already/close to signal a overbought signal, therefore a back-trace to more normal levels would be ideal - ADX also showing a strong upward trend, been doing so for days, but should change direction, if my guts are correct. lets see what happens in the coming week.
Short
by Hvalp
2
🔥 Bitcoin & FOMC Interest Rate Decision: What To Watch ForLike most of you know, in a couple of hours the US Federal Reserve will share with the world how much they will increase the interest rates. Remember that lower interest rates = bullish for the markets. At the moment, there's a 75% expectation that the hike will be 0.75% and a 25% expectation that the hike will be 1%. Naturally, if the FED will increase with 1% we can expect a massive down move. The extremely bearish reaction target for a 1% hike would be $18k. However, if the FED will only increase by 0.75% we can expect a slightly bullish move. This might be the starting signal for a move all the way back to the top of the channel, think $24k or so. Obviously, the percentage of the hike will be important. However, what most market participants are watching will be the FED meeting where J. Powell will talk about the outlook of the markets and the interest rate hikes for the coming months. This is where the real direction of the markets will be decided. My advice would be to wait for what the market will do. Ideally wait until tomorrow, because tonight's initial direction can be a fake out, like a couple of meetings ago.
by FieryTrading
17
US INTERESET RATE! FOMC STATEMENTHello guys! Let's talk about the US interest rate news that will be published tonight. I am not a good fundamentalist but I am a good chartist instead. That's why I put the US interest rate chart in the picture above. The above photo is the most data that has been published about interest rates so far. I see that around 1980 the interest rate went up to 20%. This figure is really strange for the American economy, isn't it? And for the economic crisis of 2008, raising it to 5%. The chart below is for the last 20 years. And the photo on the right is the analysts' forecast for the interest rate, that is, they predict that today the US interest rate will reach 2.5% and after that it will reach up to 3.5%. But if we look at the interest rate chart alone, it is reaching its downward trend line and I see a resistance in the lower time. Which do you think we should be assured? Chart or fundamental analysts?
TVC:DXY
by melikatrader94
1
EURUSD BULLISH OULOOK CONTINUESEUR is slowly gaining momentum against USD, after ECB raises borrowing cost, although the terminal rate of the currency remains unchanged and the risk for the Italian bond due to the political situation in the country. On the other hand, USD is giving up to the EUR due to the decline of treasury yields after some concerning data regarding factory activity and unemployment benefits. RSI's slow moving line is bouncing off the oversold zone and it's slow line is way above it. MACD histogram is also above the 0 line confirming bullish trend. If the trend continues, it might test its previous high at 1.06, but if we see a reversal, the currency might try to test its parity again. Risk Disclosure: Trading Foreign Exchange (Forex) and Contracts of Difference (CFD's) carries a high level of risk. By registering and signing up, any client affirms their understanding of their own personal accountability for all transactions performed within their account and recognizes the risks associated with trading on such markets and on such sites. Furthermore, one understands that the company carries zero influence over transactions, markets, and trading signals, therefore, cannot be held liable nor guarantee any profits or losses.
Long
by legacyFXofficial
Altcoins could see more pain as Feds keep up Interest rate hikesUsing a 4 hourly chart. Unfortunately, as we move into this bear market with all of the recession and inflation fears we will continue to see a drawdown in crypto prices. As I posted recently on a hidden bearish divergence with the Altcoin market cap chart we are starting to see a pullback already. I have a fractal for illustrative purposes only and as a visual of what can happen price-wise. Inflation numbers come out July 13th and then after this we will know how aggressive the Feds will be with the next rate hike.
CRYPTOCAP:TOTAL2Short
by altcoinb
2
Education: Why your trading strategy win rate doesn't matter!What makes a profitable automated strategy? Probably the biggest misconception for trading perpetuated in the mainstream is that you need to have a greater than 50% win rate to be profitable. This is followed by a close second, of constantly assuming you need to have a risk-reward ratio of greater than 1:1 (e.g. 1:2, 1:3 etc). This one is perpetuated mostly by forex and stock market gurus. By the end of this article, I hope to dispel these myths and aim to shed some truths on how to assess a profitable strategy. Why your win rate doesn't matter: Let's simplify this down using an example. Consider the following two strategies. Which one would you rather trade? Strategy A: 50% win rate - When you win you make 2 dollars, but when you lose, you lose 1 dollar Strategy B: 50% win rate - When you win you make 5 dollars, but when you lose, you lose 1 dollar This one was a very obvious case of choosing Strategy B. In this case, both strategies have the same win rate, but Strategy B nets you 5 dollars per win, whereas Strategy A only makes you 2. Let's take another example. A little less obvious this time. Which one would you rather trade here? Strategy A: 90% win rate - When you win you make 1 dollar, but when you lose you lose 50 dollars Strategy B: 10% win rate - When you win you make 200 dollars, but when you lose, you lose 1 dollar Now the 90% win rate strategy may look attractive on the surface, but when you dig into it, you realise that you could get a massive 50 dollar loss in the 10% of times you do lose! For those of you who chose strategy B, this is the correct answer. One way we can assess the above strategies is using Expectancy . The formula for Expectancy is as follows: (Win % x Average Win Size) – (Loss % x Average Loss Size) We can calculate the expectancies of the strategy below: Strategy A: (0.9 * 1) - (0.1 * 50) = -4.1 Meaning you are expected to lose an average of $4.10 per trade using strategy A. Not a good sign. Strategy B: (0.1 * 200) - (0.9*1) = 19.1 Meaning you are expected to win an average of $19.10 per trade using strategy B. This is a major winner here! As you've probably realised. It is possible to have a profitable strategy using a low win rate. Many trend trading/breakout strategies tend to have lower win rates, but with larger rewards to risk, whilst mean-reversion strategies tend to have higher win rates with less frequent but larger drawdowns. The backtest shown in this post shows an example of a low win rate, and high win amount strategy using the Smoothed Heikin Ashi Trend on Chart indicator which I have developed, with an overall positive expectancy, backtest (note, no strategy is perfect, should not just blindly trust backtest data). Why you may still choose to define a risk/reward Better consistency of your strategy Psychological factor of knowing that you can be expected to lose only x amount (assuming no slippage etc) As an aside, note that defining a fixed risk-reward may hurt your win rate (which could impact your expectancy) so it's important to backtest to see if you get better results with defined risk-reward parameters. This is beyond the scope of the current article, but an important consideration. Why do traders gravitate toward a higher win rate? The simple answer here is that everyone wants to be a winner! It's human nature to want to be right, whether this be about a market direction or when to open or close a trade. It's often easier to brag about how much you win whether that be on social media or just feeling good about yourself. For algorithmic traders, having a higher win rate may also provide psychological benefits, as losing 20 times in a row can sometimes be very daunting for traders and can throw doubt into the efficacy of your system. I hope that through this article, I have managed to convey that it may be prudent consider strategies with low win rates also, as these can be very profitable in their own right. Digging further: This article is only just scratching the surface of how to create and validate if a strategy is something that you should consider trading. There are many aspects of backtesting including Monte Carlo simulation, understanding standard deviation of returns and risk, Sharpe ratio, Sortino ratio, walk-forward analysis, and out-of-sample analysis to name a few that you should conduct before you evaluate a strategy as suitable for live trading. If you've made it this far, thanks for reading. If you like the content, feel free to like and share, as well as check out some of the free scripts, strategies and indicators that I have published under the scripts tab. Thank you! Disclaimer: Not to be taken as financial advice, anything published by me is purely for education and entertainment purposes
INDEX:BTCUSDEducation
by TraderHalai
3
SPY- Potential Reversal (Update- Bullish)Following a massive head and shoulders forming, the SPY has seemingly found a bottom. Watching closely for a potential bullish reversal here as there has been quite a clear shift in momentum the past few days. The SPY is forming an inverse head and shoulders on the hourly timeframe (Not Pictured, while also forming a massive bullish harmonic pattern as well as a bullish ABCD Elliot Wave on the 4-hour timeframe (See attached chart below). This is accompanied by bullish divergence on the RSI as well as a clear increase in buyer volume relative to seller volume. Still treading lightly at the moment given broader economic conditions and very possible rate hikes by the Fed coming, however, am leaning more towards bullish than bearish at the moment. Staying hedged & scaling into long-term buying opportunities. Just some FIB levels and RSI-based supply and demand zones to keep an eye on in the meantime - (Previous Charts Attached Below) -- 4-Hour Timeframe -- -- Previously Charted --
AMEX:SPYLong
by jacobosiason7
Bearish Megaphone on the SPY - UpdateJust posting another update here on the SPY- Bearish megaphone is playing out as expected but also a very big week for the markets fundamentally & technically speaking. The SPY rejected its 200day SMA today while simultaneously forming a right shoulder to complete a head and shoulders (Bearish) on the weekly timeframe. Additionally, the SPY formed a bearish butterfly harmonic pattern on the daily timeframe. However, there does appear to be a smaller bullish falling wedge within the bearish megaphone charted above. As I see it, the SPY went to breakout from the falling wedge but got rejected by its 200-day SMA after Federal Chairman Jerome Powell stated that a 50 bps rate hike is "absolutely essential". Big tech earnings (AMZN & GOOG) have the potential to single-handedly carry the S&P 500 so will certainly be interesting to see the rest of the week as to what's to come. Some FIB levels and RSI-based supply and demand zones to keep an eye on in the meantime, bearish and hedged- (Previous Charts Attached Below) --Previously Charted--
AMEX:SPYShort
by jacobosiason7
1