If commodities keep falling with long yields and inflation expectations, the USD may soon reverse current weakness; which would not bode well for global growth.
In order to understand the relationship between the stock market and the economy, we must consider who the largest participants are, and how they affect prices.
The parable of the Zen Master holds valuable lessons for traders. Not least of which is the importance of not jumping to conclusions based on emotion.
While “cut your losses quickly and let your winners run” seems like simple advice, it is psychologically and emotionally difficult to do so.
Experienced traders will recognize that the dynamic described in Part 1 is expressed in the trading adage “Cut your losses quickly and let your winners run”.
Paretian effects dominate financial markets. Understanding this can bring about a paradigm shift that leads to a more profitable approach to trading.