What's priced in versus what isn't?

FTC Community TeamStaff91 views

The market's expectations are already in the price — the trade is always about the gap between expectations and reality. Reading what's priced in is the core macro skill.

What's priced in versus what isn't? — pip movement diagram
How a pip moves the exchange rate

How do you measure it?

  • the sources you use for market pricing
  • a current example of a gap you see
  • how a gap becomes a trade for you
What's priced in versus what isn't? — risk-reward diagram
A risk-reward ratio of 1 to 2

Background: bond yields and exchange rates explains the pricing mechanics.

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