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TVO Market Barometer 3-22: “Tariff” is just another 6 letter word

Interest rates go up, the White House announces trade tariffs, the Dow falls 700 points, and the market logs its second across-the-board distribution day this month. If you think that any of those events are correlated, well then the story for you stops right here. And if you’re finding it a bit odd that the market is reacting in such an extreme way over events that were pretty much already known, well then you’re headed in the right direction, but you still may need a bit more time to get used to this whole trading thing.

Tuning out the noise of the media and your fellow traders is certainly a challenge, but here’s an easy way to get started… just convince yourself that news and moves in the market have absolutely no correlation and that every “new” bit of economic data is actually already known and therefore already priced in.

Go ahead, try it now. It might make you feel better and it may be easier than you think.

After all, you spent countless hours perfecting your system, so why would you cast it all aside every time there’s a media storm over the latest 6 letter word. Before “tariff” there was “brexit” and “grexit” and the list of buzz words goes on and on. Starting to see a pattern here?

As far as the TVO System goes, the only thing we care about in the starting sentence of this post is the distribution part because it relates directly to volume. Our method comes down to two things: 1. Studying market sentiment according to volume 2. Managing risk through position sizing. Everything else is really just noise. And if you can’t let go of the noise entirely, make sure you have an effective way to deal with number 2, otherwise there will be a heck of a lot of nail-biting going on during whatever method you choose for number one. -MD

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