Why is the Euro likely to Rise? Who cares.

The Euro's rally eased recently but it appears that it might be gearing up for another run to new short term highs.  Is it QE2?  Maybe.  Is it just the natural forces of the "risk trade" being back on that puts pressure on currencies with low rates (the dollar) as traders sell dollars as a funding currency?  Probably.  Here's the chart:

Does the "why" really matter?  Absolutely not.  Too many people get wrapped up with the "why" in the market and lose track of the goal..which is to make money.  Talking about the Fed and politicians is fun and can be profitable, as long as you keep the important questions in mind..which are "how will this affect my trading?" and "how can I make money on this idea?" 

The proper time to ask and use "why" in your analysis is when you are determining a catalyst and you are actually basing trading decisions off of various things happening or not happening in the future.  The time to determine these things is before the trade and they should be incorporated in the trade plan.  These questions and determinations should not be impromptu decisions that are made while your trade is on. As always, there are exceptions to this and there are traders that can make these determinations while trading and you know if you are one of them or not.  For the most part, traders can't do this and it is probably reflected in your P&L. 

A little bit of rant?  Yes.  Probably just pent up frustrations from dealing/working with individuals that think they know how to make money in the market.  Most don't and it is obvious from looking at their accounts.  The individuals that are the worst are the ones that know a little..they know just enough to be dangerous?  We are all at the "know enough to be dangerous" stage at some point in our trading/investing careers.  What separates the profitable from the unprofitable are the ones that either push through this stage by much work and effort and open mindedness or they turn over their investments to someone (adviser/fund manager) or some strategy (mutual funds/index funds) that performs better than their own active strategies.  The habitually unprofitable traders continue to look for the next magic formula or holy grail and they always know that they're on the verge of discovering it.  It's always worthwhile to spend a few minutes thinking about where you are in your trading/investing career. 

Happy Halloween!

TLT