During the Christmas holidays in the West, I didn’t expect significant movements in the foreign exchange market, so I only placed buying trades in cryptocurrencies. However, due to profit-taking sell-offs, I couldn’t ride the expected waves.
In retrospect, focusing on selling the U.S. dollar would have been better, as it showed more significant movements.
Reflecting briefly on 2023, it was indeed a challenging year. Although I targeted selling the dollar, I encountered persistent buying of the U.S. dollar and suffered substantial losses at times.
There were moments of anxiety about not having profits at year-end, but in the latter half of the year, I managed to ride the trends of selling the U.S. dollar and the rise in cryptocurrencies, ending up with a profit.
For 2024, I have two main forecasts:
- With the decline in U.S. interest rates, selling the U.S. dollar will intensify. (I predicted the same last year and was wrong, resulting in significant losses…)
Economists at Goldman Sachs Group see U.S. interest rate cuts steadily progressing from next March. Barclays increased their prediction for next year’s rate cuts from one to three before the FOMC meeting. JPMorgan Chase moved up the expected start of their easing cycle from July to June.
This shift in outlook suggests an emerging mainstream view that financial authorities will actively promote monetary easing. (Source: Bloomberg)
U.S. inflation is stabilizing, and banks are anticipating an earlier rate cut. I expect further acceleration of selling the U.S. dollar as this gets factored in.
- Rekindling of the cryptocurrency boom with the approval of Bitcoin ETFs and the halving event.
On the 21st, SEC officials met with executives from at least seven companies hoping to launch Bitcoin ETFs linked to the actual commodity early in 2024. They reportedly told at least two companies to submit their final changes by the end of next week. This was revealed through related documents and two sources.
Among those who discussed with the SEC were BlackRock, Grayscale Investments, ARK Invest, and 21Shares. The SEC plans to decide whether to approve the joint proposal of ARK and 21Shares by January 10. Many issuers expect the SEC to approve multiple applications simultaneously in the days leading up to the deadline. (Source: Reuters)
Bitcoin has experienced dramatic rises and falls over the past decade. Initially met with skepticism, it has now grown into a solid market.
If the Bitcoin ETF is approved, institutional investment is expected, significantly impacting the cryptocurrency market. Even if not approved, the market is too large to disappear overnight. Considering the risk-return, betting on the rise is a favorable trade.
Immediately after approval, there might be sell-the-fact selling, but over time, it is expected to follow a significant upward trend. I plan to continue with a buying perspective in 2024.
P.S.
As 2023 ends and 2024 begins, I often receive various questions. Besides my automated trading (EA), a common question is, ‘How can I improve my discretionary trading?’
The most important thing is to understand ‘crowd psychology.’ Of course, it’s necessary to be aware of trading trends, option positions, and major countries’ economic situations. But it’s not enough. What’s crucial is to think and learn about ‘how others in the market think and act.’ Many lack this perspective.
A common issue is bringing in personal biases, leading to erratic trading. Examples include trying to double a 1,000 USD capital by next month, needing to increase funds quickly due to debt, believing that a specific chart pattern guarantees no reversal, or expecting a rise due to a full moon.
Such strong self-imposed beliefs and biases will undoubtedly lead in the wrong direction. The market doesn’t care about your debt or the moon’s phase.
Prices rise because people buy and fall because they sell. It’s all about whether there are more buyers or sellers. This is simple psychology.
It’s about anticipating and following the crowd’s movement in the market. If you judge that buying is accumulating, go long. If it seems overheated, go short. Your trades should match the crowd’s current movement.
However, this isn’t something you can master immediately. Continuously analyzing the crowd traders’ reactions to daily news is necessary. Those looking to improve their discretionary trading skills should spend time understanding crowd psychology.
Let’s make 2024 an interesting year.
