Considerations on the Course of the COVID-19 Market (Part 2)

Thank you for your continued support. This is Dr. Neko.

Last time, regarding the corona market,
I did a little bit of consideration,
and since then, I feel the situation has changed even more.

First, the first point is,
we are now in a strong “dollar appreciation” phase.

This is probably due to the
power balance among currencies,
and now, the dollar seems to be the safest bet, psychologically,
I think.

What this means is,
normally, during risk-off situations,
there is a tendency to buy currencies such as yen or franc,
but now we’re in a slightly unusual situation,

・EU (Switzerland) → starting with Italy, the expansion of completion is not stopping, and future prospects are poor

・Japan → in the future, there is a high possibility that the Olympics will be “canceled or postponed,” so the future prospects are poor

・USA → initially optimistic, the dollar had been weakening, but
now large-scale economic policies and containment measures have been implemented,
and compared to other countries, there are currently fewer major concerns

As described above, the current balance of power seems to be that the United States is the safest,
I think.

(Note: 3/24 update) As the number of infections in the United States has risen considerably,

it may be that the dollar is not guaranteed to stay safe in the future either.

Whenever there is big news that could change the power balance as described above,
the forex is expected to move more than usual.

Given this situation,
for the operation of EAs, it is advisable not to set a large lot size,
keep it at a lower lot size or test it in a demo to observe,
and when the market stabilizes, revert to the original lot size,
which would be safer.
(Of course, it is also an option to run only EAs that are performing well in the current market with normal lot sizes)

Regarding the coronavirus,
the spread is still progressing,
so we should pay close attention to news from various countries in the future,
and, assuming that “we never know what will happen,”
we should operate EAs and conduct daily trading accordingly,
which I believe is desirable.

Dr. Neko