Trade of the week: stand aside
Given the heightened geopolitical tensions and increased volatility, we prefer not to trade as the reward-to-risk ratios simply aren't in our favour. Sometimes it's best to stand aside.
(Partial video transcript)
This week's trading outlook
Hello and welcome to this week's "Trade of the week", which is to stand aside. Yes, that's right - do nothing. You are trying to trade in a very highly volatile environment at the moment, with everything that's going on with regards to the United States (US) President and Europe.
Last week's trading outcome
We saw what that did last week because if we look at last week's "Trade of the week", I went short the oil price. I went short Brent crude oil, as you can see here, just around $63. I had a very wide stop on because of the Venezuela situation, and I thought the Iran situation would actually calm down. And yes, it has, and I was right. But, even though we had a really, really wide stop, which was at $66.40, we literally got stopped out within one tick at $66.41. That's bad luck.
But you know what? It happens. So for that reason, and because whether you trade currencies, indices, or even gold or silver or other commodities, anything can happen. We have heightened geopolitical tensions. Your stops, therefore, need to be quite wide if you trade on a shorter term time frame, and the reward-to-risk ratio just isn't there.
And that might be a good reason for you to thus just think, "You know what? Let's just wait. Let's see until things change or calm down a bit. And then we could perhaps trade once again". So what you want to do when you do eventually trade is to get the odds in your favour, and right now, in my opinion, on most markets they just aren't.
So, this week's "Trade of the week" is to do absolutely nothing.
Important to know
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