Due to the Federal Reserve FED keeping interest rates unchanged markets all over the world has rallied.
I hope most of you must have known by now that US Federal Reserve FED has not changed interest rates and kept it same. Due to this news stock markets all over the world have rallied.
I was thinking why this is happening? After all technically nothing has happened. FED interest rates were same yesterday as it is today. So why this rally because of technically no news?
Here is where media comes in. Some of them said, FED may raise interest rates, some said FED may keep it same, some said FED may take a decision so that investors of USA do not go to developing countries like India and China for investments.
THIS CREATES CONFUSION IN TRADERS MINDSET. And a lot of trading starts happening on speculations. Due to this VIX or Volatility increases.
Some buy PUT as per the news they read, some buy CALL as per the information they got. Some try to play Volatility and buy both CALL and PUT. Some sell Calls, some Puts, some both. A lot of useless, knowledge-less trading goes on.
End result is rarely anyone makes money.
Once the news is out again media comes in and says FED keeping rates unchanged is good for stock markets, and wow people start investing like there is no tomorrow. The result? Markets move up.
Emotions and media have a bigger role to play in stock markets than economy of a country. I would give 50% to emotions, 30% to media and only 20% to economy for rise and fall of markets the world over.
I hope you understand now why VIX or volatility increases before a big news and decreases just after that.
Let us see what is INDIA VIX today.
At the time of writing INDIA VIX is at 13.69 or 1.11 less than previous close, or has fallen by 7.50%.
To tell you the fact, I did not see INDIA VIX until I wrote the line “Let us see what is INDIA VIX today” because I knew it is almost certain that INDIA VIX would have fallen as the FED news is out.
This is experience. No media getting into head, or no news getting into head. Just trade as per your knowledge and experience and make money.
Good news for those who have done my course. As we know direction does not matter. Just book profits as INDIA VIX has fallen sharply. And wait for my next instructions on when to enter Strategy 1.
Tomorrow I will tell you how a country benefits from stock traders.
It is a request please read tomorrow’s email whenever you find time. Do not miss it.
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