The U.S. Dollar uptrend has been going on since January 6th, 2021:
International investors interested in buying U.S. real estate are having issues as converting their country's currency into the USD significantly reduces the amount of real estate they can purchase.
According to an article by Patrick Clark of Bloomberg on July 11, 2022, "Across the country, nearly 60,000 homes sales fell through according to an analysis by Redfin Corp." "That was equal to 15% of transactions that went into a contract that month, the highest share of cancellations since April 2020, when early Covid lockdowns froze the housing market."
Redfin (RDFN), which offers a full-service real estate brokerage discounted service, has suffered a staggering loss of -92.80% in its stock price after putting in its February 2021 high.
D. R. Horton (DHI), America's largest homebuilder as of January 20, 2022, responsible for 71,292 home closings totaling $21.5 billion in revenue for 2021, has dropped -46.44% from its high.
Other housing-related commodity markets such as copper -38.09% and lumber -70.24% are also signaling a recession.
Invesco DB USD Index Bullish Fund ETF • UUP • ARCA • DAILY
Redfin Corporation • RDFN • NASDAQ • WEEKLY
D. R. Horton Inc. • DHI • NYSE • WEEKLY
CFDs on Copper (US$/LB) • XCUUSD • OANDA • WEEKLY
Random Length Lumber Futures (US$/Board Foot) • LBS1 • CME • WEEKLY
In today's market environment, it's imperative to assess our trading plans, portfolio holdings, and cash reserves. As professional technical traders, we always follow the price. At first glance, this seems very straightforward and simple. But emotions can interfere with a trader's success when they buck the trend (price). Remember, our ego aside, protecting our hard-earned capital is essential to our survival and success.
Successfully managing our drawdowns ensures our trading success. The larger the loss, the more difficult it will be to make up. Consider the following:
Recovery time also varies significantly depending upon the magnitude of the drawdown:
Depending on a trader's age, they may not have the time to wait nor the patience for a market recovery. Successful traders know it's critical to keep drawdowns with reason, as most have learned this principle the hard way.
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.
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