CAREFUL WITH MARKET SENTIMENTS

1. Market is made of people and people acts on what they see, hear & believe. They are somehow emotional.

2. That is why reading and analysing market's sentiment is a MUST prior to taking any trading decision. Technical analysis should come second during this market environment, though still appplicable.

3. It is a great advantage if you can read sentiments correctly, timely & precisely.

4. You can trade multiple pairs at the same time with huge profit potential.

5. Yesterday, Friday 27th March, was a very good example on market sentiment plus the importance of knowing the economic data.

6. Prior to the released of UK 4Q08 GDP @ 5.30pm local time, plus some other news from Eurozone as well as US CPC and Spending @ 8.30 pm, the GU, GJ, EU and EJ pairs seems going south all the way. In fact, the movement has started even earlier at 2pm local time prior to London open.

7. GU moved 226 pips, GJ @ 396 pips, EU @ 335 pips and EJ a@ 451 pips. Those figures are huge for a daily movement.

8. If you were taking say 1/3 movement on each pair, you had probably banked in a minimum of 400 pips in a matter of 3 hours trading.

9. This sort of movements do not happen all the time, but it do happen.

10. The worse thing; I wasn't around to capitalize and taking advantage on these movements. I always think Friday is not a good day to trade.

11. But yesterday movements, which was quite steady in a single direction for the 4 pairs, proved that I should be more flexible in the future.

12. The sentiment is pretty simple: The market is very much worried about the deepening crisis in the UK and Eurozone and thus traders are fleeing away from Sterling & Euro back to Dollars & Yen.

13. The fear is still there and hence this move will probably continue next week unless there is something good being spoken over this weekend for the GBP and Euro to come back.

14. I could probably wrong but if you read the news carefully, this is the sentiment at the moment. People are simply worried.

15. Even the Dow Jones dropped from 7924.56 to 7776.18 (148.38 points) due to these worries & profit taking.

16. The conclusion : CAPITALIZE these movements wisely.

p/s: Somehow I still got 94 pips banked yesterday (from scalping GU) but with 3 open positions unintentionally carried over to next week (with high potential drawdowns)... You know what, my eyes couldn't stand & I fell asleep 1 hour before the market closed, haha!