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Predictor

Mathematics of Stops: Choose Your Desired Win Rate

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I want to share a technique that can help you to choose your desired winning frequency before you enter into a trade. I would guess a larger number of retail traders don't lose because they are wrong but because they use stops improperly and lose money even when they're right.

 

Assume for these purposes that the market is mostly random, if true then that means that an X point move up or down has little value in determining what the market will do next because, of course, if it did have value then we could use that predict it. Now, it is true that I predict the market but I will agree that the market is mostly random to most people most of the time. This implies we can determine our win frequency before entering a trade simply by choosing a stop and target of the appropriate size. The expected profit must be zero.

The formula is:

 

WIN AMOUNT * WIN FREQUENCY – LOSS AMOUNT * LOSS FREQUENCY = 0

 

Examples:

+5 and -5 point target and stop will win 50% by random chance

+5 and -15 point target and stop will win 75% by random chance

+5 and -20 point target and stop will win 80% by random chance

 

Formula examples:

5*W-5*(1-W) = 0

5W – 5 + 5W = 0

10W = 5, W = ½, W = .5

 

5*W-20(1-W) =0

5W -20 + 20W =0

25W = 20

W = 20/25 = .8

If these are challenging, you can use the equation solver at

http://www.algebrahelp.com/calculators/equation/

 

You can choose any winning ratio that you desire using this method. I personally would feel quite comfortable with 65% to 80% win ratio. Of course, your profit expectation is still going to be zero unless you have an edge. My point is that many people may have a slight 2% to 5% edge but ruin it with poor stops. It is very easy to erode such a small edge with a poor stop. The goal is to use the mathematics of randomness to prevent that. While the expectation is the true measure of a system, if one chooses a system with a very low win rate then by random chance they could experience a very long streak of losers. Psychologically this will be difficult for many to work through. I have, also found that when win rates drop below around 55% that the resultant equity curves become rather unstable.

 

It is worth to consider the assumptions in which choosing a higher win rate would work better then not. If our model is such that we can predict that the market will move in a given direction more times then not then choosing a higher win rate should be beneficial. However, if our ability is more about predicting the larger movements then we may want to choose a lower risk and a higher reward payoff.

 

This is an updated authorized partial excerpt from My Favorite Edges Bonus. Chapter "Choose Your Win Rate".

----

Curtis

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Hi predictor

I like your post

And just to make sure I understand it............

In a random market,

To achieve an 80% win rate,

To win $5 , you need a stop of $20.

The risk looks a bit lop sided?

Correct?

regards

bobc

 

PS

If my understanding is correct, my next question is....... Who worked this out?

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if you have to use an extra W-I-D-E stop loss in a day trade to improve your win rate,

you don't know what you are doing.

 

one of these days, the market will take your stop loss,

and you will give back 100 days of profit.

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have you actually coded this as you describe with random entries? i just did and it doesn't work out as a profitable system or at least i don't see how it can. i used risk:reward ratios of 1:2, 1:1.5, 1:2,1:3 and 2:1, 2.5:1, 3:1. none of those were profitable. in fact, they were horribly unprofitable which is exactly what i figured they would be. Also, i used a renko brick that accounts for the full range that price goes to form the brick. using renko creates a uniformand bounded view of the market and as long i choose stops and target beyond the range of the brick, i don't have to worry about intrabar wiggel as opposed to other bar types. that is why i chose the renko for this exercise.

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In the example of 5pt target and -20pt stop, you're saying an 80% win rate.

 

So, for every 10 trades, 8 will work, 2 will fail.

 

This means:

 

8 wins x 5pts = 40 pts

2 losses x 20 pts = -40 pts

 

Net = 0pts

 

Still not making money, right? (losing, if you count commissions) This is why you need to have your reward greater than your risk... even if only slightly. This is how casinos make money, even if the odds are only slightly in the house's favor. You have to be the house.

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In the example of 5pt target and -20pt stop, you're saying an 80% win rate.

 

So, for every 10 trades, 8 will work, 2 will fail.

 

This means:

 

8 wins x 5pts = 40 pts

2 losses x 20 pts = -40 pts

 

Net = 0pts

 

Still not making money, right? (losing, if you count commissions) This is why you need to have your reward greater than your risk... even if only slightly. This is how casinos make money, even if the odds are only slightly in the house's favor. You have to be the house.

 

 

True, but as I understand it, the thesis is that although gross expectancy is 0 in a 'random' market, your edge will slant the odds in your favour, or to put it another way, add a skew to the random outcomes.

 

Although I think Tams was correct in what he said about stop placement, but Predictor is on the right track I think in terms of a starting point - especially for someone going down the algo/mechanical route

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In the example of 5pt target and -20pt stop, you're saying an 80% win rate.

 

So, for every 10 trades, 8 will work, 2 will fail.

 

This means:

 

8 wins x 5pts = 40 pts

2 losses x 20 pts = -40 pts

 

Net = 0pts

 

Still not making money, right? (losing, if you count commissions) This is why you need to have your reward greater than your risk... even if only slightly. This is how casinos make money, even if the odds are only slightly in the house's favor. You have to be the house.

 

Net = 0pts ONLY if there is no transaction cost and no slippage.

 

the reality will be much uglier.

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In the example of 5pt target and -20pt stop, you're saying an 80% win rate.

 

So, for every 10 trades, 8 will work, 2 will fail.

 

This means:

 

8 wins x 5pts = 40 pts

2 losses x 20 pts = -40 pts

 

Net = 0pts

 

Still not making money, right? (losing, if you count commissions) This is why you need to have your reward greater than your risk... even if only slightly. This is how casinos make money, even if the odds are only slightly in the house's favor. You have to be the house.

 

You don't need to have your reward greater than your risk to make money...

The only think you need is a edge AND an adequate money management.

 

I use to do scalping (1 tick only) in a prop trading firm and no one had a reward > risk, you will often risk 2/3 ticks to win 1, but because we had an edge, our % win was very high and we end up being positive.

Also look at insurance companies, they have very bad risk (paying you in case something happens) /reward (the annuity you pay) ratio but still make money because they have an edge (knowing the probability that you will have an accident).

The point predictor is trying to make is that if you have an edge (like you good at drawing trendlines) but don't know where to stop and exit, using a fix ratio as described can eventually help you.

Now you need your edge to be good enough to compensate for slippage and commissions.

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.....your edge will slant the odds in your favour, or to put it another way, add a skew to the random outcomes.

 

 

I assume you mean a good entry pattern/reason. ?

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So let me get this straight....To summarise the Original Post...

 

If you have an usable edge, and win more than you loose you can afford to use wider stops. Thus giving you more opportunity for your edge to work.

 

Not only this, we've been supplied an algebraic formula to demonstrate the amount profitable minus the amount loss returns a figure of our expected return.

 

Sounds to me like a Taleb distribution.

 

Taleb distribution - Wikipedia, the free encyclopedia

 

And there is a whole chapter in a book dedicated to this???

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I appreciate that this topic generated a lot of consideration. There are many ways to look at it and many lessons/implications that can be derived from this simple article. One thing that really stuck with me though was that I made a system that bought the SP 500 at the open on random days and sold at the close. This system was basically break even over a long period of time. I ran the same test with a 20 point stop. The system that used the stop lost 100% of capital.

 

I build a lot of trading systems. I find that on the systems I've been able to test that using stops hurts the performance in almost every case. The worst combination has been the tight stop and large target combination in my testing. Perhaps, it is not surprising that this is the favorite combination favored by most traders.

 

There are a lot of take-aways One take-away should be obvious that the concept of risk/reward if defined by a static risk and reward is irrelevant and not meaningful. When a trader says he only takes 2x reward/risk opportunities then his E is also going to be zero. It is much more useful to think in terms of probabilities. This introduces such concept but again not in the ultimate form that is most useful but certainly it introduces it.

 

Another way to view this is that if you choose to use an equal stop/target combination that you have a 50% probability of getting stopped out just by random chance. On the other hand, if you set it higher to something where you win 80% by random chance then you know there was only a 20% chance that you were stopped out due to random chance.

 

As the article clearly states, this is not an edge in itself. Think about a system without stops that wins 10% more then it loses. That's a bigger edge then many casinos have. But, it is still relatively small, it is only winning 1 extra trade out of 10 more then a random system. Adding a tight stop is very likely to erode that edge. Logic reveals why. We know that any identification system will have false positives. The implication is that improper usage of stops can basically erode a significant edge.

 

It is worth to consider what type of edge one thinks one has. If the edge is more about predicting big movements, i.e trends or tail risk events, then one might be better to use options. If the edge is more about saying we are more likely to go up or down then this should work well. The usage of a tight stop with large target implies one can both predict tail risk type events and also the path followed. Of course, these are concepts for the beginner trader. Even so, experienced traders may improve their results when considering these implications.

 

I should stress these are concepts. In my tape reading course, I share methods for managing risk that goes beyond the use of stops. I will also add that stops don't work the opposite of trading targets. One would think they would but form my testing, they don't. One reason is that true protection would work more like an option, it would pay out a certain amount when you win and limit your risk when you lose. Stops don't really do that though. This is why it is important when appropriate to be aggressive on re-entering after stop outs when one uses a tighter stop loss.

Edited by MadMarketScientist
url removed

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Has anyone else noticed an increasing number of threads that are Q & A sessions for Vendors, Disguised as a discussion.

 

When did the forum become a place for free advertising?

 

oh by the way....

 

Trading is tough, if you have an edge over time you could create enough wealth to by a

2008 MASERATI GRANTURISMO 4.2 V8 [400 BHP] AUTOMATIC BIG SPEC + WARRANTY 44k ono. PM me if interested.*

 

 

 

 

 

*not genuine add,just making a point

Mazza.jpg.197d4c22f1beb64930ff4598c4f92b09.jpg

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Why is it that all these people who are vendors can post here without giving away their nature? This one is marked "not a vendor" in his profile but the oil still smells of snake.

 

I've complained about a few of them including umbloomer who repeatedly denied his true nature only to come out in a post a few months back and admit he was selling shit. What's the story?

 

:deal:

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Why is it that all these people who are vendors can post here without giving away their nature? This one is marked "not a vendor" in his profile but the oil still smells of snake.

 

I've complained about a few of them including umbloomer who repeatedly denied his true nature only to come out in a post a few months back and admit he was selling shit. What's the story?

 

:deal:

 

Thanks for the heads up ... user tagged appropriately as a vendor now.

 

regards,

MMS

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.......... the concept of risk/reward if defined by a static risk and reward is irrelevant and not meaningful. When a trader says he only takes 2x reward/risk opportunities then his E is also going to be zero.

 

.......... that stops don't work the opposite of trading targets. One would think they would but form my testing, they don't. One reason is that true protection would work more like an option, it would pay out a certain amount when you win and limit your risk when you lose. Stops don't really do that though.

 

.........This is why it is important when appropriate to be aggressive on re-entering after stop outs when one uses a tighter stop loss.

 

I think you miss the point of options and letting things run. They do have unlimited upside. There is not a cap on the upside, and so they are just like a stop when buying them...limited downside, unlimited upside.

If you want to put caps on with taking profits then you change the situation.

 

Personally.....the last things has me scratching my head.....how do you re-enter, after a stop out if using tight stops when you dont use stops, or what if the stop is large, is the next stop tighter or larger.

 

The major problem with what I think you are saying (and while there may be some interesting ideas for thought) is that while you might have a 90% win rate, it is the 10% of the losers that will wipe you out. It is one of the major flaws (recently discovered by many risk managers even though it seemed obvious at the time) with Value at risk models.

You have a 99% chance of loosing $x dollars as a maximum today......however what they dont tell you is that they have no idea of how much you will loose in that 1% when its bigger.

There are some models that work aggressively, work fantastically for a while, but ultimately are impossible for the average person to trade over the long run....and you do so at your own peril. :2c:

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First, I think it is only fair to provide a discreet link to where people can go to find more of my material if they like it. I mean, I guess, you rather me post my material under an anonymous handle with no link to my work? I had other free articles I had planned to post but will not do so until I'm assured that I can provide references to my material.

 

SIUYA: This is the problem with stops no matter how they are used. If you use a tighter stop then you're going to be stopped out more often and if E is zero then you're going to lose even more/faster. Experienced traders know that one has to be more aggressive when using tighter stops. It should make sense due to the false positives. I was going to post another more in-depth article about knowing WHEN to use big vs small stops but I'm going to wait for an official word from the moderators about if they will accept a link to my website.

 

Options are different then stops because the price can go lower then your stop out level and come back. Stops are PATH DEPENDENT whereas options are sensitive to the END POINT. Likewise, options have time decay whereas holding the underlying doesn't. These are much different trading vehicles.

 

I think you miss the point of options and letting things run. They do have unlimited upside. There is not a cap on the upside, and so they are just like a stop when buying them...limited downside, unlimited upside.

If you want to put caps on with taking profits then you change the situation.

 

Personally.....the last things has me scratching my head.....how do you re-enter, after a stop out if using tight stops when you dont use stops, or what if the stop is large, is the next stop tighter or larger.

 

The major problem with what I think you are saying (and while there may be some interesting ideas for thought) is that while you might have a 90% win rate, it is the 10% of the losers that will wipe you out. It is one of the major flaws (recently discovered by many risk managers even though it seemed obvious at the time) with Value at risk models.

You have a 99% chance of loosing $x dollars as a maximum today......however what they dont tell you is that they have no idea of how much you will loose in that 1% when its bigger.

There are some models that work aggressively, work fantastically for a while, but ultimately are impossible for the average person to trade over the long run....and you do so at your own peril. :2c:

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i dont have an issue with you being a vendor....though I do understand the issue :)

 

regardless of how aggressive you want to be, and how small or large a stop you want to use, your method IMHO is likely to cause issues with blowups, due to sequencing of events/stops/trades/

While it might be used to help modify to try and get an optimal stop level for future trades that give you your desired trade off between win/loss ratios and the like.

however, I look forward to seeing other more detailed ideas.

 

when it comes to options - if they are different why bring them up?

Plus they are exactly the same in the way you describe them.....they might expire and then become profitable, or the decay might not be enough to cover the gain over the time period, even though the direction is right.....same end result, you loose but then you are right.

Options I assume you mean are sensitive to THEIR end point, if you buy them in that they both have an expiry and set amount that can be lost (with no slippage)

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As a simplification, each time I look at the market, I ask, where is it going and how well is it getting there, and what do I need to do to take money from it, and can I do it without hurting my account.

 

There are times in markets where and when a high risk, low reward, high probability trade makes sense if done right. And there are times when a low probability, high reward, and low risk strategy makes more sense to me, and there are times when neither make sense. In poker parlance, sometimes it makes sense to play rags and sometimes you have to dump Aces.

 

Under all circumstances I do not turn a blind eye to risk or ROR. I dial up or down the number of contracts I trade to bring the dollar risk into line with my account. The max risk is really all that matters to me. I am not a "stop or target" trader. I believe that it is foolish to impose overly rigid rules on a dynamic system. The markets encourage arrogance.

 

Other times, when I can't figure out the 4 questions I stay away completely. Without question, there are times, many times, when I do not get the answers right. Generally, that means that market conditions are changing. Hopefully, at that point, I am not on tilt and too stubborn to realize the change.

 

I have certainly have had bad days trading a high risk, low reward, high probability strategy, wishing I had stayed out, but I have had bad days with a low risk, low probability, high reward trade strategy too. On the other hand, I have also had insanely profitable days trading either or both.

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I want to share a technique that can help you to choose your desired winning frequency before you enter into a trade. I would guess a larger number of retail traders don't lose because they are wrong but because they use stops improperly and lose money even when they're right.

 

Assume for these purposes that the market is mostly random, if true then that means that an X point move up or down has little value in determining what the market will do next because, of course, if it did have value then we could use that predict it. Now, it is true that I predict the market but I will agree that the market is mostly random to most people most of the time. This implies we can determine our win frequency before entering a trade simply by choosing a stop and target of the appropriate size. The expected profit must be zero.

The formula is:

 

WIN AMOUNT * WIN FREQUENCY – LOSS AMOUNT * LOSS FREQUENCY = 0

 

Examples:

+5 and -5 point target and stop will win 50% by random chance

+5 and -15 point target and stop will win 75% by random chance

+5 and -20 point target and stop will win 80% by random chance

 

Formula examples:

5*W-5*(1-W) = 0

5W – 5 + 5W = 0

10W = 5, W = ½, W = .5

 

5*W-20(1-W) =0

5W -20 + 20W =0

25W = 20

W = 20/25 = .8

If these are challenging, you can use the equation solver at

Equation Calculator & Solver -- Algebra.help

 

You can choose any winning ratio that you desire using this method. I personally would feel quite comfortable with 65% to 80% win ratio. Of course, your profit expectation is still going to be zero unless you have an edge. My point is that many people may have a slight 2% to 5% edge but ruin it with poor stops. It is very easy to erode such a small edge with a poor stop. The goal is to use the mathematics of randomness to prevent that. While the expectation is the true measure of a system, if one chooses a system with a very low win rate then by random chance they could experience a very long streak of losers. Psychologically this will be difficult for many to work through. I have, also found that when win rates drop below around 55% that the resultant equity curves become rather unstable.

 

It is worth to consider the assumptions in which choosing a higher win rate would work better then not. If our model is such that we can predict that the market will move in a given direction more times then not then choosing a higher win rate should be beneficial. However, if our ability is more about predicting the larger movements then we may want to choose a lower risk and a higher reward payoff.

 

This is an updated authorized partial excerpt from My Favorite Edges Bonus. Chapter "Choose Your Win Rate".

----

Curtis

 

WOW!!! This sounds exactly like my idea! What a coincidence.... NOT!

Probability in Trading

http://www.traderslaboratory.com/forums/trading-psychology/11560-probability-trading.html

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if you have to use an extra W-I-D-E stop loss in a day trade to improve your win rate, you don't know what you are doing.

 

One of these days, the market will take your stop loss and you will give back 100 days of profit.

 

:crap: OUCH!! Thanks for the painful reminder, Tams. I got bit using the wide S-L in my early quest and it was a very cold bucket of water lesson learned. :2c:

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Dear MMS

How much does it cost to place a small advert on TL?

kind regards

bobc

 

 

Here's one for tagging too. At least he's honest enough to pay for his forthcoming ad/post....

 

(only kidding Bob :) )

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    • Yeah, and you should never stop learning. If you wish to survive in the Forex Market, the only way to do it is by learning all the time.
    • Date : 1st December 2021. Market Update – December 1 – Taper gets a boost & Transitory gets “retired”. Powell “retires” Transitory in light of Omicron & surprisingly suggests faster taper – Stocks tank, Dollar& Yields rise on faster tightening expectations.   USD (USDIndex 95.90) back down from leap to 96.60 on Powell testimony. Saw fresh wave of risk aversion as Treasuries sold off, yields spiked (particularly the 2yr) , Stocks fell significantly with USA100 down over -2.4% (APPL bucked the trend +3.16%) USA500 -1.90% (-88pts) 4567 & USA30 off 652 pts or -1.86%. Consumer confidence saw a slump in the headline, and a rise to a 13-year high in the inflation component. The Chicago PMI fell to 61.8. Home prices increased to fresh record peaks. US Yields 10-year rates were down over 7 bps to 1.41% before closing at 1.443% before recovring to 1.468% now. Asian Markets – Equities – Topix and Nikkei are currently up 0.4%, the Hang Seng bounced 1.1% and the CSI 300 is up 0.1%. The ASX, which outperformed yesterday, dropped back -0.3%. Data over night – Japan’s manufacturing PMI came in stronger than expected and while China’s private PMI reading signalled stagnation at 49.9, that was compensated somewhat by the stronger than expected official manufacturing PMI released yesterday. AUD GDP was not as bad as expected -1.9% vs -2.7% & 0.7% last time. USOil – continues under pressure, down to $64.08 (14-week lows) yesterday – recovered to test $68.00 today – expectations continue to grow that OPEC+, will put on hold plans to add 400,000 barrels per day (bpd) of supply in January at their meeting tomorrow. Gold finally some intra-day volatility – Powell surprise spiked to $1808 – before testing $1770 with a couple of hours, back to $1788 now. FX markets – Yen rallied USDJPY dipped to 112.50, back to 113.40 now, EURUSD now 1.1326 & Cable steadied to 1.3300-1.3330. European Open – December 10-yr Bund future down -11 ticks at 172.26, slightly outperforming versus Treasury futures. Central bankers may be getting more nervous about inflation outlook, but Omicron clearly is clouding over growth outlook & in Europe at least that will boost the arguments of the cautious camp at the central banks. US yields remain firmly below the levels seen before the new virus variant hit the headlines & sentiment is likely to remain jittery, even if stocks are set to back up from yesterday’s lows, with DAX & FTSE 100 future posting gains of 0.9% and 0.7% respectively & a 1.4% jump in the NASDAQ leading US futures higher. Data releases today kicked off with a big miss for German Retail sales (-0.3% vs 1.0%), higher UK house prices & firmer CPI from CHF. Today – PMIs (EZ & UK),US Markit Final Manufacturing PMIs, US ADP and ISM Manufacturing PMI, JTC and OPEC meetings, BoE’s Bailey and Fed’s Powell & Yellen testify. Biggest FX Mover @ (07:30 GMT) NZDJPY (+0.60%) Risk-sensitive currencies remain volatile, from a slide to 76.65 yesterday, today a rally to 77.80. Currently MAs aligned higher, MACD signal line & histogram over 0 and rising, RSI dipping from 70.00 at 58, Stochastic remain OB. H1 ATR 0.172, Daily 0.84. Always trade with strict risk management. Your capital is the single most important aspect of your trading business. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HotForex Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! Click HERE to READ more Market news. Stuart Cowell Head Market Analyst HotForex Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • Date : 30th November 2021. Market Update – November 30– Stocks at ups & downs. Omicron remains in focus and warnings that it will leave current vaccines far less effective and that it will take time to modify and produce new ones has seen markets adjusting growth forecasts and central bank projections.   USD (USDIndex 96.00 up from 95.92 low) saw a fresh wave of risk aversion as Treasuries sold off, but cautiously with only a modest back up in yields, & Stocks bounced significantly with the USA100 jumping over 2% intraday with IT a big winner. It closed with a 1.88% gain, with the USA500 1.3% firmer, and the USA30 up 0.68%. Wall Street stocks closed higher as investors were hopeful that the Omicron coronavirus variant would not lead to lockdowns after reassurance from US President Joe Biden. Moderna’s CEO told the FT that existing vaccines will be less effective and that it may take months before modified vaccines are available at scale. #Moderna +12.73% yesterday. US Yields 10- and 30-year rates were up just over 3 bps to 1.51% and 1.859%, respectively, with the 2-year 1bps higher at 0.508% The 10-year is currently corrected -3.9 bp to 1.46%, but it is still in negative territory, at -1.05% on Tuesday, keeping gold’s opportunity cost low. Equities – Topix and Nikkei are down -1.0% and -1.6% respectively, Hang Seng lost -2.3%, the CSI 300 -0.6%, while the ASX outperformed with a modest gain of 0.2%. USOil – down by 2%, drifted to $66.73 – after FT cast doubt on the efficacy of COVID-19 vaccines against the Omicron – expectations are growing that OPEC+, will put on hold plans to add 400,000 barrels per day (bpd) of supply in January. Gold spiked to $1795 – World Health Organization said on Monday carried a very high risk of infection surges. #TWTR was UP 12% pre-market on news Dorsey was leaving as CEO – it closed DOWN 2.74%. The USA100 rose+1.88%. FX markets – Yen rallied (a new flight to safety), Aussie and kiwi slide. USDJPY at 112.94, EURUSD now 1.1326 & Cable steadied to 1.3300-1.3330. European Open – The December 10-year Bund future is up 46 ticks, Treasury futures are outperforming and in cash markets the US 10-year rate has corrected -3.9 bp to 1.46% amid a fresh wave of risk aversion. DAX and FTSE 100 futures are down -1.5% and -1.1% respectively, while a -1.1% drop in the Dow Jones is leading US futures lower. In FX markets both EUR and GBP gained against the Dollar. EGB yields had moved higher against the background of improving risk appetite and a jump in German inflation yesterday, but while Eurozone HICP today is likely to exceed forecasts, central bankers have already been out in force to play down the importance of the number for the central bank outlook and rate expectations. Virus developments will also help to take the sting out of the number. Today – German labour market data, EU Inflation, Canadian GDP and US Consumer confidence are due today. Fed Chair Jerome Powell and Treasury Secretary Janet Yellen are due to testify before the US Senate Banking Committee at 15:00 GMT. Biggest FX Mover @ (07:30 GMT) AUDJPY (-0.68%) Risk-sensitive currencies slid and safe havens gained. AUDJPY dropped to 80 lows (S2). Currently MAs point rightwards, MACD signal line & histogram below 0, RSI rising above 30 but Stochastic OS. Hence a mixed picture intraday. Always trade with strict risk management. Your capital is the single most important aspect of your trading business. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HotForex Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! Click HERE to READ more Market news. Andria Pichidi Market Analyst HotForex Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • Date : 29th November 2021. Market Update – November 29 – Omicron dominates sentiment. USD (USDIndex 96.30) recovers from Fridays slump (95.98), Stocks lost over –2.2% in thin half-day trading, Oil FUTS lost –13%, Gold slumped and Yields tanked (10-yr 1.482%) on a safe haven (JPY & CHF bid) risk off day. (and a strange carry trade bid for EUR). Weekend news, as Countries block flights and tighten restricts, but first Omicron cases in SA appear mild and hospitalizations have not spiked, has seen a bounce in sentiment and Asian markets. Pfizer suggested it would take 100 days to adapt new vaccine, if required. US Yields 10yr trades up 5.1 bp at 1.52%, after Friday’s slump. Equities – tanked in thin and short day on Friday USA500 -106.84 (-2.27%) at 45941 – USA500.F trades higher at 4639. USOil – collapsed to $67.08 – now up nearly $4 at $71.00. OPEC+ have delayed this weeks meeting by 2 days & likely to delay planned January production increases. Gold spiked under $1780, has bounced to $1795 but struggles to recoup $1800   FX markets – EURUSD now 1.1270, after a +125pip rally on Friday, USDJPY now 113.36, from 115.50 to 113.00 on Friday & Cable back to 1.3325. Overnight – JPY Retail Sales recover but miss expectations (0.9% vs 1.2% & -0.5% last time). European Open – The December 10-year Bund future is down -27 ticks, US futures are also in the red & the US 10-year rate is up 5.1 bp at 1.52%. Stock markets remained under pressure during the Asian part of the session, but DAX and FTSE 100 futures are up 1.2% and 1.3% respectively and a 1.2% rise in the NASDAQ is leading US futures higher. A part reversal of Friday’s flows then as virus developments remain in focus. Travel restrictions are making a come back and the services sector in particular is facing fresh pain, but as Lagarde suggested over the weekend, the impact of Omicron is unlikely to throw economies back to the situation at the start of the pandemic, meaning the overall situation has not really changed. We continue to see the ECB on course to end PEPP purchases on time in March next year, although developments will add to the arguments of those who want to keep the flexibility on the distribution of asset purchases at least for future emergencies. The BoE meanwhile may be postponing the planned rate hike into next year. Today – German regional and national CPIs, Eurozone Consumer Confidence (final), US Pending Home Sales, ECB’s de Guindos, Schnabel, Lagarde, Fed’s Williams, Powell. Biggest FX Mover @ (07:30 GMT) CADCHF (1.00%) The risk-off collapse on Friday 0.7400-0.7200 has recovered to 0.7280. MAs aligned higher, MACD signal line & histogram rising but still below 0 line, RSI 53.80 & rising H1 ATR 0.0018, Daily ATR 0.0062. Always trade with strict risk management. Your capital is the single most important aspect of your trading business. Please note that times displayed based on local time zone and are from time of writing this report. Click HERE to access the full HotForex Economic calendar. Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! Click HERE to READ more Market news. Stuart Cowell Head Market Analyst HotForex Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
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