You can also have various equity sectors responding in different ways to economic events with cyclical stocks falling during hard times and defensive stocks rising.
Stanley Druckenmiller once said that one of the reasons for his success was that he was lucky to travel across asset classes. He traded commodities, currencies, bonds and equities and it gave him the discipline to trade only what he had the highest conviction in. If he didn't have a good idea in equities, he was happy to have no equities.
What you can do though is to trade the country's government bonds as a tighter policy will cause a drop in those securities. In this way you reduce your risk and increase your chances of success.
With more experience you’ll start to notice that when you have high conviction in your trade, because you clearly see the reasons for taking a position, your psychological pressure will be much lower compared to the times when you force trades trying to outsmart the market.
This article was written by Giuseppe Dellamotta at www.forexlive.com. Read More Details
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