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Gauging Conviction in EURUSD, Stocks, Sentiment

Gauging Conviction in EURUSD, Stocks, Sentiment

2015-11-20 01:18:00
John Kicklighter, Chief Strategist
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Talking Points:

• Conviction is crucial for building momentum or calling the end of a run

• Fundamentals motivate the herd to move in a certain direction, but many traders prefer to measure than preempt

• Volume, speculative positioning data and correlations are sound measures for a market view

See volume behind the majors to establish building or fading conviction using the free FXCM Real Volume and Transactions indicators.

The trading potential of a market hiccup is very different than that of a strong trend. Most traders look for moves that carry conviction and thereby can generate more progress and ultimately return. Measuring conviction is crucial for separating suspect trades from those with genuine appeal. There are a range of methods for gauging the market's dive. For the thematic assessment of 'risk appetite bias', it is better to replace a specific benchmark with an evaluation of correlation across otherwise disparate assets. For a more-directed individual market read, volume and other capital flow measures can give a sense of strength behind positioning. In today's Strategy Video, we look at conviction through correlations, volume, directional volume and capital metrics for ETFs.

STRONG RISK TRENDS TEND TO ALIGN BENCHMARKS LIKE SPX, USDJPY

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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