In interest raising period, what will be the next trends?
- Thread starter BillKey
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It'll be interesting to hear the answers, I've never been able to trade well based on news or relating to economic factors. I'd argue fully understanding economics at a high level is even more difficult than becoming a top trader. There's so many variables to factor in and than trying to time everything correctly, that's obviously the most difficult part.
You're essentially trying to front - run what other people will do, where as in probability trading your taking actions based on whats already done and using that as a basis measurement to determine risk, reward and expectation of where price typically moves to given the the set up.
Not claiming you're trying to front run personally, just saying that's the impression I get from people trying to trade news or economic factors. Personally I'll wait for long term trend to change bearish, as once it does you'll likely still have plenty of shorting opportunities.
You're essentially trying to front - run what other people will do, where as in probability trading your taking actions based on whats already done and using that as a basis measurement to determine risk, reward and expectation of where price typically moves to given the the set up.
Not claiming you're trying to front run personally, just saying that's the impression I get from people trying to trade news or economic factors. Personally I'll wait for long term trend to change bearish, as once it does you'll likely still have plenty of shorting opportunities.
Well, it is hard to confirm weather all things will follow the history of what people did in the past. It is a little complex to say people will follow routine because we think we have surpassed many things and change the world alot. For me personally, I think people can not change themselves no matter how advanced we have in technologies or what others. So I think I bet on not rates but humanities, set up channels there, wait things happen.
one trade will be to short rallies in treasury futures ..maybe if 10 yr ZN rallies on stock market pullback..that would be one.
Dollar will respond and possibly Gold..those will make some money..so maybe short gold rallies from here on higher inflation with domestic growth in U.S
Maybe DX futs supports in mid 99 ish area gold should rally against it if it isn't spazzed out like it gets sometimes
Raising interest rates this time is quite different than normal times. Usually interest rates are increased when inflation gets out of hand and the govt wants to control spending in the economy. However, this time, interest rates are being raised after a long period of deleveraging (credit reduction in the system). Fed is most likely raising interest rates expecting that private spending in the economy will finally start to improve after years of deleveraging since 2009. And not because they want to decrease private spending. So price levels in these conditions should continue to increase. Only problem would be if expected earnings growth does not materialise in which case equity markets would be historically overvalued. I dont know what size is trade in US GDP, but Trump's trade policies would be something to keep an eye on to trade.
When you say deleverage, I guess you mean in personal spending sectors? 'cause many of them went bankrupt in personally when real-estate bubble bursted. I did not have numbers of debt from govt backed ventures and companies, but I supposed they were the biggest beneficiaries from debt growth model (QE) like Freddie Mac and some relative funds like REITs. My question is when new govt tight the debt growth in both govt backed and private companies (if it implemented ), whether those sectors would shrink in the future? Or they maybe develop new models to make govt's money?
From a macro sectoral balances viewpoint, it depends upon whether or not private sector is able to substitute govt spending in those sectors. If rate of decrease in govt debt growth is faster than rate of growth of private spending then it should shrink. Im not so familiar with the American system but I am sure you can find these forecasts for USA.