All Eyes On Brexit

Hello MarketClub members everywhere!

Make no mistake about it; the markets will all be obsessing about whether or not Great Britain will stay or leave the EU.

MarketClub's Mid-day Market Report

This morning all the markets are thinking happy thoughts and are rising as they think that Britain is going to stay in the EU.

The bottom line is no one has a clue if Great Britain will stay or leave the EU. The other crazy thing is no one has a clue as to what will happen if Great Britain leaves. As you can see, there is no clear cut path or idea as to what's ahead.

So here is what to do - I call it the "Desert Island" approach to trading. Let's say you were trapped on a desert island with plenty of food and water but with no news of any kind. The only news you could receive is stock and futures prices - could you trade on just that information? Before I answer that question, ask yourself this question, if you were looking back at a stock chart and back testing would you be looking at the news? The answer is probably not, you would be looking at price action and that is exactly what the market proven Trade Triangle's do every day.

The bottom line is price action make market trends.

One caveat - Black Swan Events

"Black Swan" market events are so rare and cannot be predicted either through technical or fundamentals analysis that they should be pretty much discounted.

The Black Swan theory was developed by Nassim Nicholas Taleb to explain:

1. The disproportionate role of high-profile, hard-to-predict, and rare events that are beyond the realm of normal expectations in history, science, finance, and technology.

2. The non-computability of the probability of the consequential rare events using scientific methods (owing to the very nature of small probabilities).

3. The psychological biases that blind people, both individually and collectively, to uncertainty and to a rare event's massive role in historical affairs.

So there you have it - price action trumps news except in Black Swan events. Of course, that is only my humble opinion

Stay focused and disciplined.

Every success with MarketClub,
Adam Hewison
Co-Creator, MarketClub

3 thoughts on “All Eyes On Brexit

  1. The fear-mongers who argue against Britain leaving the EU, equating such a move with the end of the civilized world, fail to see that what started out as a continental trade agreement has evolved into a bloated and corrupt bureaucracy, supported by a European Parliament which exists only to rubberstamp and lend an air of legitimacy to the bureaucratic musings, meanderings and seemingly random legislative desires of the unelected hierarchy. The model used for the Brussels/Strasbourg behemoth was likely FIFA.
    Imagine if NAFTA had evolved as did the EU. We would now have 3 rotating North American capitals and be struggling to enact and enforce common garbage collection regulations.
    As to the effect on the markets? So I got a little off topic.
    Go Britain. No. Really. Go.

  2. Black swan events include state-sponsored terrorism, ballot box stuffing, fearmongering, and any other tactic the losing establishment feels necessary to achieve the ends it desires, namely to remain in the EU regardless of what the people of Great Britain want.

  3. I just cant understand why people of almost entire world are become extremely Confused- Conscious about Brexit? and so this situation raised many questions like
    is the World Economy is so fragile? is it just cant tolerate any such single event? whether any firm study taken placed regarding all possible impact on whole world?

    In above write-up, the third and last point of "Psychological biases" is perfectly applying here, and we experienced that Globally, people have deemed and trying to prepare for just and only negative impact therefor, but in fact, which too, is also a just "Probability or Possibility" only.

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