The Liquidity Crunch

What happened

On 16 March 2020, after the Fed cut rates to zero on a Sunday, gold fell almost 7% in a day.

Funds sold everything, even safe havens, to raise dollars: a lesson that "safe" assets can crash in a liquidity crunch.

How to survive a day like this

• Check the economic calendar and the news before you trade: these days were announced or brewing for hours.
• Reduce your risk: on extreme days, 0.5% per trade is plenty, because stops can slip far beyond where you placed them.
• Do not fight the first move. The first candles of a shock set the direction for the rest of the session more often than not.