I have a list of trading rules that I periodically share, here is an example from 2013
Today is a perfect day to talk about Secret #6, which says to fade moves on disasters and geopolitical events.
When an entirely unexpected event like a natural disaster or geopolitical event takes place, the first reaction on trading floors is always the same — close positions.
What more evidence do you need of panic than the moves today on Syria. People are freaking out because of some pie-in-the-sky risk of a Third World War. Risk trades are curled up in the fetal position.
I don’t know what’s going to happen but it sounds like the US will drop some bombs. Who knows, maybe it will escalate from there. If it escalates to global thermonuclear war then we’re all done for anyway. If it doesn’t, Syria will probably continue its civil war and Wal-Mart will keep selling poorly-made products. Nothing will change and today’s moves will unwind.
Yen shorts, stock market longs and betting against oil are all ways trade it. Naturally, timing is key because when the bombs fall the panic might start again (but it will be very short-lived). Either position now and ride it out or be ready. I’ll take the other side of a panic trade any day.
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