Can the Silver Trigger catch a falling knife? | You can only take from the market what it will give you

The old adage that it is not normally a good idea to try to catch a falling knife is a good one. The idea is that, while it is possible to take a view that an instrument is “toppy”, that is to say it has gone beyond the level of price rise that is reasonable, and is due for a fall, it is not at all easy to time that fall. Many false starts can be made, and entry on the short side during these can be costly.

In the case of the Euro against the dollar, all fundamental considerations point to a fall. Quantitative Easing is on its way and the fiscal and monetary situation in Europe is not conducive to a strong Single Currency,

We have now set the Silver Trigger to go short on the Euro against the US dollar (EURUSD). As regular readers will know, a certain momentum to the downside will be required to trigger a pending order, and then price will have to reach the level of the trade for it to become an opened one. If price keeps rising prior to the Silver Trigger giving the signal, the trade will not be placed until the higher level.

We will see what happens.

We have also set the Silver Trigger to go long against USDJPY, short against AUDUSD, short on gold and our AUDNZD short trade remains in place.

You can only take from the market what it will give you

Part of Omicron Forex training and the Omicron Forex Trading Manual is the subject of Trading Psychology. This emphasises the need to have a stable, realistic and positive mental attitude in your Forex activities.

One of the most important things to understand in this context is that you can only take out of the market what the market will make available. This can best be illustrated by imagining an extreme case, that of where there is no activity at all - price remains the same at all times and the charts show a straight, horizontal line. If such a thing were to happen there would be no opportunity to make profits, period.

It is also reasonable to suggest that there are situations where the price action, although not completely stopped, is very low. So low, in fact, that trading opportunities are of such poor quality that they might as well not exist. Because in addition to making small moves, such low volatility also makes the market direction unreliable.

When these conditions are present, there is nothing, but nothing, that the individual trader can do to change them. All he or she can do is wait.

So it is a big mistake to beat yourself up for finding trading difficult on a low volatility time, which is what we are going through at present.

What you must do is train yourself to be able to see such occasions for what they are: part and parcel of the trading environment, just like losses from time to time.