How can you effectively trade with central bank interference?
Central banks were defined to be independent of political influence. Here in Europe they have a mandate for price stability and a dual mandate for employement and inflation in the US. You can find millions of lines of commentary, observations, studies, rants on their effectiveness or ineffectiveness. I’m not even superficially qualified to comment intelligently, yet, I’m frustrated about the impact central banks are having on my trading efforts. I have a habit of asking questions I can’t answer, here’s another.
Can I successfully trade long term with unpredictable central bank intervention?
I’ve been working hard to measure technicals and fundamentals. I’ve been building risk management and trading strategies which work for my style of trading. Fundamentally, I have confidence in the Markets working as they were designed to work, otherwise, I would be building cabinets, or growing carrots in the mountains. Maybe one day I’ll be doing just that, but as of today, I’m sticking with the Markets. I find them surprisingly visionary.
Back to my question… Europe is in a political crisis, because the Markets are working as they should. They’re screaming at individual states, one after the other, ‘get your shit together!’. The US and Asia are watching Europe from the sidelines as their own political crisis cooks. (Stick a fork in it…) Soon enough focus will shift back to China or the US. But for the moment I’m watching the Markets being manipulated by Draghi, Merkel, and Golden Dawn.
If Markets aren’t left to work as they were designed to work, and the only direction is up, I don’t see a future in this long-term. Investment bankers will be in bed with politicians who are already under the covers with the central banks. That’s a big bed with three selfish participants. Independant market participants won’t be invited to the party. I have stronger and stronger confidence in my short positions (atleast long-term) but weaker and weaker confidence in my ability to manage my time frames.
I expect some clues this summer, and will revisit the question, when Europe goes back to work in September, that’ll be about the moment that the US is coming out of the oven.