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  • #Bitcoin is continuing to trade lower since its sell-off from above 60,000 earlier this week. The crypto is setting lower highs as the week advances and is currently trading just shy of the 55,000 level. $BTC https://t.co/mUqJu5Sau4
  • ETH/BTC spread back to levels last seen in August 2018... https://www.dailyfx.com/forex/market_alert/2021/04/22/Bitcoin-BTCUSD-Slide-Resumes-Ethereum-ETHUSD-Continues-to-Outperform.html
  • ECB Sources: ECB Hawks did not repeat calls for PEPP tapering at short, calm policy meeting on Thursday. #ECB $EUR
  • Forex Update: As of 14:00, these are your best and worst performers based on the London trading schedule: 🇯🇵JPY: -0.01% 🇨🇦CAD: -0.08% 🇨🇭CHF: -0.10% 🇦🇺AUD: -0.44% 🇳🇿NZD: -0.61% 🇬🇧GBP: -0.69% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/8weSC1Z8kF
  • Indices Update: As of 14:00, these are your best and worst performers based on the London trading schedule: France 40: 0.87% Germany 30: 0.80% FTSE 100: 0.35% US 500: -0.08% Wall Street: -0.28% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/d68HbWLIrn
  • The US Dollar is attempting to move higher again today. The $DXY has risen from a morning low around 91.00 to currently trade around 91.35. The index tested the 91.40 level yesterday before meeting resistance and dropping lower. $USD https://t.co/JwsszQpv8J
  • Commodities Update: As of 14:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: -0.31% Gold: -0.43% Silver: -0.93% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/gNyBVpEfPh
  • 🇺🇸 CB Leading Index MoM (MAR) Actual: 1.3% Expected: 1% Previous: -0.1% https://www.dailyfx.com/economic-calendar#2021-04-22
  • Please join us at 11:00 EST/15:00 GMT for a webinar where you can learn how to identify price trends with trader sentiment. Register here: https://t.co/qguzXYUjTo https://t.co/Jw6GVisPdx
  • 🇺🇸 Existing Home Sales MoM (MAR) Actual: -3.7% Expected: 0.8% Previous: -6.3% https://www.dailyfx.com/economic-calendar#2021-04-22
Strategy Video: Evaluate Whether the Trade is Worth the Return Potential

Strategy Video: Evaluate Whether the Trade is Worth the Return Potential

John Kicklighter, Chief Strategist

Talking Points:

  • Assessing the potential return of a trade or market is just as important - if not more so - than evaluating the risk
  • Market level, participation and volume, activity level, seasonal constraints and more can distort returns
  • Short-term setups, nearby targets, reasonable risk-reward ratios and preference for risk aversion meet conditions

See the DailyFX Analysts' 3Q forecasts for the Dollar, Euro, Pound, Equities and Gold in the DailyFX Trading Guides page.

It has been said by many people and in a number of different ways, but 'I would not take a trade that offered little to no return if it worked out' is suitable wisdom for every market participant. In this environment, the question of expected return is increasingly relevant in the evaluation of new trades. Evaluating the potential (ideal) and expected (reasonable) profit in the risk-reward assessment is more than simply finding a technical level or fundamental cue to attach a target to. A full appreciation of market conditions is necessary for applying reasonable objectives. And, there is a risk of exaggerating our expectations to fit a desire greater returns in these markets.

We have frequently discussed the limitations for further gains on 'risk' benchmarks like the S&P 500. The level of the index is already a hindrance - record highs offer few milestones for speculators or value investors to track out. Yet, beyond the level, the tepid participation (volume) of the market and the divergence with underlying fundamentals (earnings, GDP, etc) creates a weight in the form of doubt. However, the limitations extend beyond just individual indexes or assets. It is a general misalignment for sentiment bearings. Exposure to high risk assets is excessive and the dependency on low volatility - itself linked to monetary policy - creating a fragile backdrop.

Where conditions seem to undermine the returns that align to 'risk on', it is more evenly distributed this week. In other words, efforts to mount a 'risk off' move just as likely struggle to gain traction. That is due to the expected liquidity drain that is common for the month of August as well as the notorious curb on progress that occurs before the US Labor Day weekend. A very low return potential renders most trades unattractive from risk-reward terms. So, should we expect to identify many attractive setups this week in the convergence of seasonal and structural liquidity droughts? We discuss that in today's Strategy Video.

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

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