Adjusting to Crisis - COVID-19 & GFC


In news driven environment or a systemic crash there needs to be an adjustment in thinking from a technical sense to one that is fundamental. Remember who is looking at the markets right now. The smaller technical traders are no secondary to; the big boys hedging portfolio risk, commodity traders hedging currency risk and oil traders hedging price risk on oversupply. Volatility is now through the roof, so we must adjust.

Adapt and change

Today the AUDUSD moved 300 pip in the space of 2 hours which is “right out there” and towards the third standard deviation. We are already ok with the risk measurement due to fixed risk calculations however we may want to look at adjusting our Alerts EA as the first level is getting hit too many times. Look toward the second level instead. Additionally, we may want to look at a higher timeframe to see swings a bit better.

Technical may not work as well. In times like these I would certainly advise to reconsider counter trend trades. If you see divergence double bottom etc, just remember the big guys hedging don’t care about technicals. They will just eat you up.

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