Okay, so – I hope – readers of this blog are not actually out on the streets looting and rioting. On the other hand there are plenty of people making a bomb this week betting against the pound on the currency markets as they fear that BritGov is proving unable to stem the idiotic behaviour of the nation’s “disaffected youth” (whatever that means).
This and the fact the the US Fed are going to make their interest statement later on today and a lot of the clever money is on positive news for the dollar though not an immediate raise in interest rates today, though that is now in the realms of the possible, make betting on the dollar quite popular today.
Even my stalwart silver is dropping against the instincts of the traders. Look at the order books and you will see a lot of exposed long positions from the current $38 all the way up to $41. Gold too, is dropping today- probably temporarily – below $1750 where it stood for a while.
It all goes to show that the markets are played like a game and have very little to do with real life. In real life, economies do not get turned around on a single decision or in a single day.
We are constantly fed the mantra that the markets are right and the markets make the right price. It is complete nonsense. What I see is a herd of sheep running this way and that in reaction to thunder and lightning that they have no control over.
There is no overall intelligence in this decision making, it is quite simply greed and fear. Currently the overriding mechanism controlling the markets is a sense of fear as the gamblers who call themselves financial experts scrape sweat from their necks and watch their quarterly bonuses slip away from their slimy nervous grasp.
So, if you’re are a small time currency trader what should you be doing? Well, if you don’t have the time to concentrate and watch the screens, walk away from the desk for the next few days as the roller-coaster ride is far from over. And with lower volumes during the holiday season volatility is exaggerated beyond normal levels.
However if you have the time to concentrate, there are plenty of opportunities to be had. Look out for areas where the fear has thrown the markets into disarray and watch for the sense to prevail, which is likely to occur toward the end of the week as banks need to reconcile their open books.
With things moving so wildly and so fast however, I won’t make any recommendations as to what to buy or sell. Just use your brain and common sense and note what others are doing. Run with the sheep! There is no money in being the prophet of doom – you may be right both in your prediction and morality but you’ll make nothing from it! Never try to get off a roller-coaster till the ride is over, jumping off a speeding train often leads to injury!