With the U.S. dollar and global stock markets reacting sharply bearish to Trump’s “Liberation Day” and gold soaring to new record highs, you might be wondering if you’ve missed the boat on these significant market moves. Let’s consider a few important questions before deciding to dive in.
### 1. Are the reasons behind the move still relevant?
It’s true that change is the only constant, particularly in trading where shifts can happen rapidly. Before you decide to follow the trend, verify that the factors driving the move are still applicable. Ask yourself:
– Has market sentiment shifted since the movement started?
– Are there any new influential factors like regulatory changes, market circuit breakers, or trading restrictions?
– What do technical indicators, candlesticks, or market volume reveal? Any hints of exhaustion?
### 2. Can I secure a better entry price?
In the excitement of the market, it’s easy to overlook entry points that might offer better returns for the risks taken.
– Are there chances to enter during a pullback, even on shorter time frames?
– Are psychological price levels stable enough to allow for bounces where you can make an entry?
If these conditions exist, exercising patience and waiting for a more advantageous price could allow for improved risk management.
### 3. How should I manage my risk?
Once you’ve assessed the move as worth pursuing, the next crucial step is safeguarding your account by managing potential losses if the market turns against you.
There are no certainties in trading. As taught in our School of Pipsology, trading without any risk management is akin to gambling. With higher volatility, setting exit levels can be tricky since tight stops might get hit quickly. However, completely forgoing stop losses isn’t advisable either.
A good strategy could be trading smaller positions at first and scaling up if the market moves in your favor. Though you may not score big initially with a small position, you’ll also avoid significant losses if the market doesn’t move as anticipated.
### 4. Is FOMO influencing my decision?
FOMO, or the Fear of Missing Out, is a common emotion among traders. Recognizing this before jumping into a trade is crucial.
Feeling anxious about missing potential profits isn’t a solid reason to enter a trade impulsively. The move could be overstated, or prices might fluctuate unexpectedly.
If you often regret not jumping into large market movements, it might be time to revisit your trading strategy. Instead of succumbing to negative emotions, analyze previous big moves and identify which indicators, key points, or economic events you might have missed.
