The next few days are some big ones for the markets and for you too as a trader in the markets.
The US election is a toss-up, which given the history of the past elections will likely lead to chaos. Everything and anything can happen.
If it were a sporting event, it would be considered the Super Bowl, the World Series, the World Cup finals or other significant game pitting the two heavyweights.
That event will influence your trading or will it?
I like to think of trading as preparing for a game – a sport – where teams, coaches, and players drill and drill, focusing on fundamentals, scheming for different scenarios that may happen in the game, understanding the nuances of the opponent, and then going out and playing the game.
The good teams – the best teams – are prepared and process-oriented. They are not focused on individual plays or even the result, but instead focus on the process for success.
- They train and get in the best physical shape
- They practice, practice, practice
- They have the same routines in the preparation.
- They drill and drill on the fundamentals of their positions.
- They are disciplined. They don’t make silly mistakes.
- They study the opponent. They know their tendencies when they line up one way, when they have certain formations or do this or that.
- They see/antiicpate the future from the process that happens before the game is even played.
They understand that they will win some and lose some but if they stick to the process, if they do the same thing that they have done over-and-over again (the process) they will have done all they could to win.
My love for sports goes to my youth when I played and later as a fan. That love was extended to my children. One of our sons loved sports so much, he dedicated his focus on becoming a professional football coach…as in American football.
Through “the process” he has advanced his career from the equipment room when he first started as a freshman at Arizona State University, to where he is now a defensive Linebacker coach for the Oregon Ducks who just so happen to be the #1 team in the nation on the college level. That journey has spanned 16 years now, taken him from Arizona State, University of Wyoming, Cologne Germany (yes), University of Memphis, University of Georgia, University of Colorado, Oregon State and now Oregon. He was rooted in the process of what it took to move up the ladder, and also learned the lessons on what it means to be rooted-in-the-process on the field.
This past weekend, the Ducks played in front of over 100,000 people when they took on the Michigan Wolverines on Michigan’s home field/pitch. Michigan won the National Championship last year. Although it has been a down year for the Wolverines, it was an unfriendly environment to say the least and Michigan could salvage the season with an upset at home vs the #1 team in the nation.
The Ducks won 38-17.
Why? The Ducks stuck to the process – a process that they are rooted in.
A few weeks ago the Ducks took on another top team when they played Ohio State Buckeyes the #2 team in the nation at the time. Oregon was #3.
Both teams were undefeated. It was the biggest game of the year. The TV audience was likely to be the largest of the season with 13-14 million people watching.
The head coach, Dan Lanning, addressed the team and then the coaching staff before the game.
Here is what he said about being rooted in the process:
The Ducks won 32-31 in a thriller. Both teams were process oriented but Oregon outslugged the Buckeyes in an Instant Classic.
I feel like Dan Lanning before the big game.
Yes, it is a big week in the markets this week, and if you are playing the game, you will need to be in peak trading shape. However, the process should be the same.
That process involves understanding the tendencies of the fundamentals. What should a Harris or Trump victory mean to the markets?
The most bullish dollar scenario would seem to come with a Republican sweep of the President, House and Senate on the back of loose fiscal policy, tight monetary policy, immigration deportation and tariffs adding to inflationary risk.
Conversely if the Dems sweep, the dollar is likely to weaken.
In the US stock market, the general feeling is Trump victory would be good for stocks while a Harris victory might be more bearish.
In the US debt market, a Trump win is likely to lead to higher yields and a steeper curve as concerns not only about inflation but deficits increasing given the proposed Trump policies. In addition, the deportation of immigrants is likely to push up inflation as there will be fewer workers in the service economy.
A Harris victory will likely lead to a more limited move higher in yields at least initially because of tighter fiscal policy vs the Trump alternative and perhaps lower inflation as a result of no new tariffs pushing up imported product prices
What about the technicals or what the process should be when you look at the charts?
Technically speaking, the process for traders should remain the same for today, tomorrow and the next day after that. Each day, my process does not change. The price action and the tools applied to the price action remains the same.
If the price does “this” in relation to a technical tool, it either increases the bullish bias or increases the bearish bias. If it is bullish, buy or go long. If it is bearish, sell or go short.
From that, we can look for targets in the direction of the bias. IF the next target in the direction of the bias is reached, then look for the next target (i.e., the next play) that advances the trade (i.e. the ball) to more profit (i.e. down the field).
The goal is for the process to eventually lead to exiting the trade with a profit (i.e. or a touchdown).
If the price action does not do what you expect, limit your risk by using the same tools. Putting it another way, “get out” if the bias shifts back the other way (i.e., from bullish to bearish or bearish to bullish).
This post is not intended to tell you “the way” -. I do that every day in my technical posts on Forexlive. You can see what the game planning process is coming into the week by going to my weekend post HERE.
Instead, the purpose is to implore you to understand that successful traders are rooted in the process of their trading. If you do, your best is good enough because of the way you prep for your trading. That is why you do it. That is why you are disciplined in what you do.
So although it may be intense over the next few days, go out, take advantage of being rooted in the process and I hope because of the effort, you enjoy the rewards of your work.
GO DUCKS!