Yesterday Fed announced its policy and there has been no change in its stance and its committed to contribute $85B to mortgage markets. Markets sold off. Financial pundits appeared in TV and they gave new theory which is complete non sense and its bullshit.
Everyone on TV said that Fed is going to taper immediately and they are simply going to wind up the support. Bernanke has clearly said that he would wind up the support gradually on the basis of data. He added that if data doesn’t support fed is not going to withdraw its support.
He also added that he would start tapering on slow pace based on data and only after tapering he would look on to withdraw QE and only after that he would think about raising interest rates. Whereas pundits have conveniently forgotten everything and they simply shouted that he has signaled tapering which is complete ignorance or purposely shouting for some unknown interests.
INR has depreciated almost 2% against USD and I believe this is complete panic. This is not 2008 and if something goes wrong Fed would simply pump more money and could continue to support system. Secondly there has been no disorderly default like Lehman Brothers that happened in 2008.
If a trader has been in panic situation he would never see money making opportunities. There has been lot of money making opportunities but that has to be done in intelligent manner by taking small trades and go aggressive on confirmation.
GBP, Euro has been trading at higher levels and if you watch these counters you would simply identify that the raise of both these currencies happened on not so higher volumes and are completely speculative in nature. This is bound for small correction and one could try in these couple of currencies.
Its always advisable to trade small position in order to keep our emotion intact despite panics that are bound to happen in the markets.
Disclaimer: Do it at your own risk and don't blame me for your losses.