Trader's Fog

If you are not familiar with a “Trader’s Fog”, it is eerily similar to the fog of war. It occurs whenever there are strong levels of ambiguity in situational awareness that is experienced by all participants in the market.

Currently, the Trader’s Fog is thick and there are very few indications that it will be lifting at any time in the near future. The major causes for this recent fog are listed below in chronological order.

• September 14 - Investment bank Lehman Brothers files for bankruptcy protection
• September 16 - The U.S. Federal Reserve lends $85 billion to AIG
• September 19 - Treasury Secretary Paulson calls for $700 billion dollar bailout
• September 26 - Washington Mutual’s assets are sold to JPMorgan for $1.9 billion
• September 29 - House of Representatives reject $700 billion bailout
• October 3 - House of Representatives approves a “revised” $700 billion bailout
• October 8 – Global Rate Cut by the central banks
• October 10 – G7 pledges to work together to stabilize global financial markets
• October 14 – Paulson “forcibly” buys $250 billion dollars worth of shares from 9 of the largest U.S. banksAnd so with a Trader’s Fog that is likely thicker than any other time in history, the most difficult thing for traders to know is how any of the major events listed above and how the subsequent reactions by the governments of the world will ultimately affect the market. As has been said in previous articles, so much has been done so quickly, that no one really knows if anything is really working or going to work going forward.
PPatterson@IntegrityFX.comForex Trading | Forex Signals | Live Forex Training | Currency Trading