Hi there! Ever notice how we are quick to follow rules for work, church, and life, but when it comes to our own rules, especially in trading, we slack? Most traders, myself included, don’t lose because we don’t know how to trade. We lose because we don’t follow our own rules.

I looked into this further and the research I read was intriguing. Turns out, we’re wired for survival, not trading. And trading is all about probabilities. If you trade desperate for money, the market will eat you alive.

So how do we fix this? Shift to probability-based thinking. And this type of thinking also works for business, work, and life. Here’s what helped me:

• Prepare – success in anything comes from preparation. It takes time.

• Journal – Track what works, what flops, and how you feel. That’s how you learn.

• Review – Notes mean absolutely nothing if you don’t use them to improve.

• Find accountability – Surround yourself with disciplined, resilient people.

• Detach from emotions – Focus on execution, not wins and losses.

• Prioritize process over results – Consistency wins, not chasing quick success.

If you are trading, running a business, or leveling up in life - structure, discipline, and mindset are key. Follow your own rules and trust the process. 

Alright, let’s dig in!

Last Week’s Market Overview (February 9 - February 15, 2025)

Markets wrapped up the week with solid gains across major U.S. and European indices. The S&P 500 approached record highs, while the STOXX 600 hit fresh all-time highs. Treasury yields ended the week lower, crude oil prices fell, and gold continued its upward trend. Investors navigated a busy macroeconomic calendar, inflation surprises, and trade policy developments.

Despite a slow start, the Nasdaq led with a 2.58% gain, followed by the S&P 500’s 1.47% rise and the Dow's 0.55% increase. Equities saw mixed reactions as hotter-than-expected CPI data pushed back rate-cut expectations before weaker retail sales provided relief later in the week. Meanwhile, Washington headlines, particularly President Trump’s announcement to delay reciprocal tariffs until April, added another layer of market focus.

U.S. Markets Recap

Equities:

• The S&P 500, Nasdaq, and Dow Jones all posted weekly gains despite fluctuations driven by inflation data and trade policy uncertainty.

• Tech stocks rebounded from prior losses, with notable earnings surprises boosting sentiment.

• Airbnb saw its best trading day on record following an earnings beat and a promising strategic outlook.

Fixed Income:

• Treasury yields initially jumped on hotter CPI data but retraced lower as retail sales softened.

• The two-year and 10-year Treasury yields ended the week slightly lower, aligning with growing rate-cut expectations.

• The $66 billion 10-year Treasury auction refinanced a 2015-issued bond with a much lower coupon, increasing future interest payments significantly.

• The Congressional Budget Office projected that interest payments will account for 25% of federal outlays by 2050, up from 13% today.

Commodities:

• The Bloomberg Commodities Index ended higher.

• Crude oil prices fell due to rising U.S. inventories and potential ceasefire talks in the Russia-Ukraine war.

• Gold continued its climb, driven by inflation concerns and increased physical demand in the U.S.

Currencies:

• The U.S. dollar weakened across the board, largely due to the delay in reciprocal tariffs and shifting interest rate expectations.

• Emerging market currencies strengthened as investor sentiment improved on trade policy developments.

U.S. Economic Recap (February 9 - February 15, 2025)

Retail Sales and Consumer Activity

• Retail sales fell 0.9% in January, signaling a slowdown after a strong holiday season.

• Non-store sales declined by nearly 2%, the sharpest drop since mid-2021.

• PCE inflation is projected to decelerate to 2.6% when released on Feb. 28.

Inflation and CPI Impact

• Annual inflation accelerated to 3.0% in January from 2.9% in December.

• Shelter costs accounted for nearly a third of the increase, rising 0.4%.

• Energy prices rose 1.1%, while egg prices surged 15.2% due to bird flu-related supply constraints.

• Auto insurance costs climbed 2% with no signs of easing.

Global Markets Recap (February 9 - February 15, 2025)

Europe:

• European equities reached all-time highs, with strong earnings from Nestle, Siemens, and Hermes boosting sentiment.

• The most significant bullish factor was optimism surrounding ceasefire talks between President Trump and President Putin regarding the Russia-Ukraine conflict.

• U.K. markets underperformed due to growing budget concerns.

Asia:

• Asian equities logged a fifth consecutive weekly gain, led by a 7% surge in Hong Kong fueled by AI enthusiasm.

• Mainland China, South Korea, and Japan ended higher, while Taiwan and India posted slight losses.

• Tech stocks remained in focus, with investors closely watching the impact of U.S. trade policies.

Crypto Recap (February 9 - February 15, 2025)

Bitcoin & Institutional Demand

• Bitcoin hovered near $97,000 last week, with trading volumes and institutional accumulation increasing.

• Goldman Sachs doubled its Bitcoin ETF holdings to $2.05 billion.

• Bitcoin ETFs from BlackRock and Fidelity continued attracting significant inflows.

Robinhood’s Record Q4 Performance

• Crypto trading revenue skyrocketed by 700%, driving Robinhood’s first annual profit.

• Total assets under custody grew to $193 billion, an 88% YoY increase.

• Robinhood expanded crypto offerings, including Ethereum staking in the EU.

Klarna’s Crypto Integration

• Klarna announced plans to incorporate cryptocurrency payments into its platform.

• CEO Sebastian Siemiatkowski cited growing fintech adoption and venture capital interest as driving factors.

Last week’s top crypto gainers: LTC, OM, CAKE, SONIC (formerly FTM)

Here are other key highlights from last week:

• Maryland introduced Bitcoin Reserve Bill.

• Brian Quintenz of a16z Crypto nominated by Trump for CFTC leadership.

• AGI firm Sentient held an NFT mint with over 650,000 participants.

• State Street and Citi reportedly eyeing crypto custody services.

Another exciting week in the markets!

Key U.S. Economic Releases:

• NY Fed Manufacturing Index (Tuesday)

• Building Permits & Housing Starts (Wednesday)

• FOMC Meeting Minutes (Wednesday)

• Jobless Claims (Thursday)

• Philly Fed Manufacturing Index (Thursday)

• Services & Manufacturing PMI (Friday)

• Existing Home Sales (Friday)

• Consumer Sentiment (Friday)

Fed speakers this week:

• Monday: Harker, Bowman, Waller

• Tuesday: Daly

• Wednesday: Jefferson

• Thursday: Goolsbee, Musalem, Jefferson, Kugler

• Friday: Jefferson

Earnings: 

The key Earnings Releases to watch this week are outlined in red in the chart below.

Global Economic Events This Week:

Trading Tip:

“Historically, the Thursday and Friday after Presidents’ Day have been bearish!”

Week 2/09/25 - 2/15/25 Recap

Special Tools and Strategies - Fair Value Gap (FVG)

In financial markets, traders constantly seek an edge to maximize profits. One strategy that has gained popularity involves identifying and trading Fair Value Gaps (FVGs). These gaps represent price inefficiencies that, when understood correctly, can offer lucrative trading opportunities.

Fair Value Gap (FVG) Fundamentals

Definition

A Fair Value Gap (FVG) occurs when there's a significant disparity between the closing price of one trading period and the opening price of the next, resulting in a "gap" on the price chart. This gap indicates an imbalance between buying and selling pressures, often due to sudden market reactions to news or events.

Common Misconceptions

• FVGs Always Get Filled: While markets often retrace to fill these gaps, it's not a guaranteed outcome.

• All Gaps Are Tradable: Not every gap presents a viable trading opportunity; context and confirmation are crucial.

Types of FVGs

• Bullish FVG: Occurs when prices gap upward, suggesting potential upward momentum.

  

  Bullish FVG (Source: Trading View)

• Bearish FVG: Occurs when prices gap downward, indicating potential downward pressure.

  

  Bearish FVG (Source: TradingView)

Identifying Fair Value Gaps

Step-by-Step Process

1. Analyze Price Charts: Focus on timeframes that align with your trading strategy (e.g., daily, hourly).

2. Spot Significant Price Movements: Look for large candlesticks indicating strong buying or selling momentum.

3. Identify Gaps: Note areas where the price movement skips levels, creating a visible gap on the chart.

Tools and Indicators

Utilizing charting platforms like TradingView with built-in indicators can simplify the identification of FVGs. Such platforms offer automatic detection of these gaps, highlighting them directly on your charts.

To find a built-in FVG indicator on TradingView:

1. Go to Indicators and search for Fair Value Gap or search for FVG

2. Select the one that best suits you. Pro Tip: Start with the one that has the most users/downloads.

   

   Fair Value Gap Indicators in TradingView

Practical Trading Applications

Entry and Exit Strategies

• Entering Trades: Consider entering a position when the price retraces to fill the FVG, aligning with the overall trend.

• Exiting Trades: Set profit targets beyond the gap, anticipating continued movement in the trend's direction.

Timeframe Considerations

FVGs can appear across various timeframes. Short-term traders might focus on intraday charts, while long-term investors may consider daily or weekly charts to identify significant gaps.

Incorporating FVGs into Your Trading Plan

• Combine with Other Indicators: Use FVGs alongside tools like moving averages like the 200 EMA or RSI to confirm potential trades.

• Set Clear Rules: Define specific criteria for entering and exiting trades based on FVGs to maintain consistency.

Risk Management When Trading FVGs

Risk Mitigation Techniques

• Use Stop-Loss Orders: Protect your capital by setting stop-loss levels just beyond the gap.

• Diversify Trades: Avoid overexposure by not allocating excessive capital to a single FVG-based trade.

Position Sizing Recommendations

Determine position sizes based on your overall risk tolerance, ensuring that potential losses remain within acceptable limits.

Common Pitfalls to Avoid

• Overtrading: Not every FVG presents a high-probability setup; be selective.

• Ignoring Market Context: Always consider broader market trends and news events that could impact price movements.

FAQ Section

Q1: Do all Fair Value Gaps get filled?

Not necessarily. While many gaps do get filled due to market dynamics, it's not a certainty.

Q2: Can FVGs be used in all markets?

Yes, FVGs can be applied to various markets, including stocks, forex, and cryptocurrencies.

In the stock market, consider a scenario where a company's positive earnings report leads to a significant overnight price increase, creating a bullish FVG. A trader might wait for a slight pullback into the gap before entering a long position, anticipating continued upward momentum.

In the volatile crypto and forex markets, sudden regulatory news might cause a sharp price drop, resulting in a bearish FVG. A trader could look for a retracement into the gap to enter a short position, expecting further decline.

Q3: What timeframes are best for trading FVGs?

It depends on your trading style. Day traders might prefer shorter timeframes (e.g., 5-minute charts), while swing traders might opt for daily charts.

Key Takeaway

So, Fair Value Gaps offer valuable insights into market inefficiencies and potential trading opportunities. By understanding and effectively incorporating FVGs into your trading strategy, you can enhance your ability to identify profitable setups. Always remember to apply sound risk management practices and continuously educate yourself to navigate the markets successfully.

Disclaimer: This newsletter is strictly educational. The information this report provides does not constitute investment, financial, trading, or any other advice. You should not treat any of the report’s content as such. Please be careful and do your research.