You may be asking what "IT" is. "IT" is a few things.
One "it" would be volatility. The longer that governments stay involved in the markets, the longer volatility will stay at the lower end. There may be spikes here and ther, but overall, if equities stay bullish to neutral, there is no way the VIX can rise and there is no way that there will be intraday opportunities like there would be in normal trading markets without government interference.
Point in case: the largest range we have had in the GBP/USD over the past 3 weeks is 125 pips and most of those days have been trend up and then sideways action during the US session. I do have to admit, there has been more action in the European session, but unfortunately, I value my sleep. It would be fantastic to live/trade out of Europe, so I do envy you guys - hopefully you are taking advantage of a smidge more volatility then we are seeing over here in the US session.
That being said, I know that most of the volume is going through at the end of the European session and the beginning of the American session. so then again, maybe we are overlapping just a bit.
"IT" number two is refers to kicking REALITY" down the line. No one and I will stress this, NO ONE has been through this type of intervention before and NO ONE knows the long term affects of it. Will it work? Right now as far as equities go, it is working perfectly! There isn't anywhere else to put your money except in equities. I am referring here to what bonds give you as far as income versus dividends and growth that stocks have. I of course know that a stock can go down in price, but overall, the stock market as a whole is performing better than bond markets, real estate, etc... We all know that is a fact, but obviously anything can happen in the markets and location, location, location. All I am saying is where are you going to put your money? In bonds returning1% in 10 years or in a stock market that is going up, up, up. This in itself may lead to volatility as investors seek refuge in stocks and when volatility hits, they get very nervous. They used to be in bonds that were "guaranteed" income and now they are in a stock that may be dropping in price.
So "IT" number two and low interest rates forces people to seek returns in what can be a volatile stock market. "IT" number two is also the Fed kicking reality down the road and thus, may actually be providing future volatility that could be around for a long time that is actually very benefiical to you and me.
The point is, "IT" is in place and "IT" is being prolonged and we don't know when "IT" will stop and add new volatility. For now, sitting on your hands as one preson on IBFX's "Connect" put it (you can follow me at "thelocalstake") may be the best thing to do.
I am looking forward to reality setting in, it is just a matter of how long down the road it re-enters our trading monitors.
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Happy Trading and Be Environmentally Cool
Coach Brian
Forex is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.
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