The forex market is moving quickly following this week's collapse in equity prices and a subsequent move down from resistance on the USD/JPY. However, with stocks at support and the VIX (fear index) at resistance a turnaround could occur next week. This is not a reason to stay out of short USD/JPY trades but it is reason to be more careful about risk control. Because risk control is one of the few things a trader or investor can control it makes sense to make the most use of it as possible.
Until equities break these levels it makes sense to apply tighter risk coverage on short USD/JPY positions. This can be accomplished with a protective call, tighter stops, additional diversification or a smaller position that you scale into as the market moves beyond these inflection points. In the video I will go into more detail about these ideas and the reason why I look at the intermarket environment as I manage a position rather than just evaluating entries and exits.
