There is an expression coined by a political leader in the U.K. that "a week is a long time in politics"
That could just as easily be applied to the financial markets if not more so.
The short-termism that pervades financial markets nowadays means that sometimes "a day is a long time in FX".
Technical analysis allows traders to trade without emotion as what they see within their method is black and white, up or down, right or wrong. The interpretation work has been done in the setting up of the method at the outset.
Those looking at the fundamental factors need to use interpretation on every release. what does the data tell us about the market within our chosen time-frame?
There is an interesting article on yahoo which discusses traders in banks turning to performance coaches to re-evaluate their trading techniques.
Being able to look at oneself when in the middle of a bad run is critical as in the day trading business it is very difficult to find genuine mentoring.
This week has clearly been a good week for the Euro where the stars have lined up with technical and fundamental factors driving the single currency higher. But can such optimism really continue for any length of time.
Can we trust the data releases from the U.S.? Can we trust that the EU leaders meeting tomorrow can deliver a lasting solution for the debt crisis? Is china going to continue to grow at a pace that can drag the global economy along with it.
"Who cares I am only looking at one hour charts anyway and as long as the market moves I can make money"
That is a perfectly genuine and valid quote but it brings me back to a point I have made several times before.
If the statistics are to be believed, losses far outweigh profits in day trading and there must be a common reason. I have said many times before, to me it is down to experience and understanding of the marketplace in which we all operate.
There is a place for scepticism regarding the motives of the big players but it is now a volume game and spreads have been driven lower by liquidity not the motive of sucking traders in.
My view on spreads, particularly five decimals, is that the proliferation of HF trades is a far greater threat to your profitability than stop hunting.
Lets just see how the rest of the week pans out but the optimism scale looks to be heavily in overbought territory right now