Thread by @TradetheMatrix1

Here is why you should learn about functionality of risk-ON/risk-OFF in #markets no matter what asset class you decide to #trade:

1.

It gives you foundations to good expectations. There is one pool of global capital that moves in and out of the risk offense or risk defense mode. You should know in what mode market is today to begin with and how it impacts your selected ticker of the day in focus.

2.

For example, if you decide to long equity ticker under severe selling pressure like $FRC the risk-ON flows have to cooperate, else your chances of longs working are going to be by default much smaller. The riskier the asset and the more liquid the more you need risk-ON mode.

3.

Meanwhile a very stable and robust positioned company as $NVDA currently doesn't need major risk-ON flows cooperation to hold stable or push. Example of ticker with very different profile to current situation.

4.

When you watchlist your tickers figure out if it is highly feeding of risk-ON/OFF because if so you should not trade against the current present flows. How to do that is a long story to explain well.

5.

Use $SPY, #gold, #bonds, #dollar to see where the trends are going before market open and then also in mid day if trends are still the same or changed. Is each asset class clearly in risk-ON or OFF? If so that should impact the trading plan of watchlisted tickers.

6.

From my observations and personal mistakes the common beginners error is not paying any attention to those flows and trying to create plan for traded tickers in ignorance of risk on/off mode. This increases randomness SIGNIFICANTLY.

7.

"Let me try to figure out what X tickers will do today regardless of cycle flows and whether markets are in risk ON or risk OFF today" is common mistake to creating watchlist plans that one can find for 70% of trading online content. Yep...70%+.

8.

This is where studying basic structure of global capital flows will do you a lot of good for your #trading. You will need to understand basics of currency or bond flows if you want better plan creation for your stock trades on daily basis.

9.

Operating in a bubble of your preferred market class with complete disregard to other asset classes is very common. To improve accuracy of asset directions and plans daily you need to separate yourself from that mainstream pitfall.

10.

You don't need to spend obsessive hours on studying that as long as your studying is structured well and you cover the flows dynamics as it should be (in and out and what triggers them). Good luck.

11.