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Embracing the Fear of Losing Money

  • FEAR = False Evidence Appearing Real. Almost all fears never materialize.
  • When facing these fears, and we must face them, it might be good to ask the question “what is the worst thing that could happen?” If the pain in the answer to this question is too much to bear then simply exit the trade.
  • The main reason traders’ exit their losers is that the pain of losing one more dollar becomes almost unbearable. All of this pain could be eliminated by using a trading plan and learning to think in probabilities — nothing is certain.
  • Ask yourself what is the worst possible thing that could go wrong with the trade and what would be the best possible outcome that could happen with the trade? Somewhere in between these two extremes is the logical outcome.
  • Differentiate between rational and irrational fear. If it isn’t life threatening, it is probably irrational fear.

CFTC Commitments of Traders: Big swings in AUD and EUR

Forex futures positioning data for the week ending June 16, 2020:

  • EUR long 117K vs 96K long last week. Longs increased by 21K.
  • GBP short 16K vs 24K short last week. Shorts trimmed by 8K.
  • JPY long 22K vs 17K long last week. Longs increased by 5K.
  • CHF long 2K vs 2K long last week. No change
  • AUD short 7k vs 37K short last week. Shorts trimmed by 30K
  • NZD short 9K vs 11K short last week. Shorts trimmed by 2K
  • CAD short 25k vs 26K short last week. Shorts trimmed by 1K
  • Prior week
Aussie shorts really threw in the towel but EUR longs continue to pile in. That’s a fresh two-year high and a massive one-week move.
Forex futures positioning data for the week ending June 16, 2020:

Moody’s affirms USA credit rating at Aaa, outlook stable

Moody’s not interested in a lawsuit

Print all you like, spend all you like. No one is downgrading the USA after S&P did and the government sued them for $1.5B for mortgages. Even the company knew what it was all about.
At the same time, a country that prints its own money can’t default. But they can devalue.

US stocks reverse lower but still a solid week

Closing changes for the main US indexes:

Closing changes for the main US indexes:
  • S&P 500 down 17 points to 3098 (-0.6%)
  • DJIA down 207 points to 25872
  • Nasdaq up 3 points to 9946
The S&P 500 opened up 1% but a wave of cases in a number of US states along with other virus concerns crushed the market’s spirit. There was a late bounce to unchanged then an even-later slump into the close.
On the week:
  • S&P 500 +1.9%
  • DJIA +1.0%
  • Nasdaq +3.8%

Tech is a freight train.