What a week it has been. Markets were completely dominated by President Trump and the sudden escalation around Greenland. Right out of the gate he announced punitive tariffs on any country opposing his full takeover of the Arctic nation, putting the UK and Europe firmly in the firing line.
Global stock markets did not like it one bit. The German DAX was hit hard, shedding over 3%, the UK FTSE dropped around 1.5% at the open, and US stocks followed suit as risk was dumped quickly.
The Davos U-Turn: Markets Breathe Again
Then came the Davos moment. In classic Trump fashion, a sharp reversal. Speaking at the World Economic Forum in Switzerland, he confirmed there would be no use of force against a fellow NATO country and that tariffs were off the table. Markets breathed out. Stocks pushed higher and much of the earlier damage was rapidly erased.
On the surface, the whole episode feels unnecessary. The deal Trump is now promoting does not look materially different from what was already in place. But this is Trump. This is the market we are trading. In my 30 years of trading, I cannot remember a period where a single individual has injected this level of unpredictability into global markets. And we still have another three years of it to navigate.
Gold Takes Centre Stage as the Ultimate Safe Haven
With all the noise and uncertainty, the clear winner from the geopolitical chaos has been gold. It has been on an absolute tear and is now flirting with the $5000 handle. The move has been nothing short of spectacular, up 6% this week alone and already 14% since the start of the year. A weaker US dollar has poured fuel on the fire and helped drive these explosive moves higher.
At this point, $5000 almost feels inevitable.
Why Trend Following Matters More Than Ever
That said, at some stage we are going to see a very sharp correction. Trying to pick a top in this kind of market is a dangerous game. This is a textbook example of why trend following works. Ride the move, respect the momentum, but always have protection in place.
Wider stops and smaller position sizes are, for me, the only sensible way to trade an environment like this. The trend is your friend until the bend at the end, and that is exactly why risk management matters more than ever.
If you are trading in one of our simulated prop accounts, you also need to be mindful of daily drawdown limits. The last thing you want is to see weeks of good work wiped out by a Trump tweet. If you are getting close to your daily drawdown, close the trade, switch off the PC, and step away. It will be better for your mind and your account.
Yen Volatility Builds as BOJ Intervention Looms
Another major story quietly shaping markets is Japan. The Bank of Japan kept rates unchanged at this week’s meeting, but yields have surged in recent months and the yen has been heavily sold. Speculation is growing that the BOJ may step in to support the currency.
The last time USDJPY reached these levels, intervention followed. Traders are now bracing for possible action again. Either way, the yen looks set to be the most volatile major currency over the coming weeks.
Crypto Pauses as Regulation Uncertainty Lingers
Crypto had a relatively quiet week despite the Trump-driven headlines and ongoing uncertainty around US regulation. The potential delay to the US crypto market bill suggests Bitcoin may struggle to make meaningful progress in the near term.
Looking Ahead: Central Banks and Staying Disciplined
Next week is likely to be dominated once again by whatever Trump does, or does not do. On the economic front, we have central bank rate decisions from the US and Canada, with both expected to leave rates unchanged. As always, the forward guidance will matter far more than the headline numbers.
As I always remind my PropIQ students, this is the time to ignore the noise and trade your strategy. Focus on your plan, keep risk small, and always use stops. No single trade should make or break you. Avoid over-correlated positions and let the market come to you rather than reacting to every headline.
If you want to see how our most consistent traders apply these principles in real conditions, take a look at the latest PropIQ webinar for a full walkthrough.
Disclaimer
This market commentary is provided for educational and informational purposes only. It reflects the opinions of the author at the time of writing and should not be taken as financial or investment advice.
Funded Trading Plus operates evaluation and simulated funded challenges, not live trading accounts. All references to trading, strategies, or market opportunities relate to simulated trading environments. Past market performance or individual trader results are not indicative of future outcomes.
About Andrew Lockwood
Andrew Lockwood is a seasoned professional trader with over 40 years of experience in financial markets. Starting his career on the floor of the London International Financial Futures Exchange (LIFFE) in the 1980s, Andrew has traded through multiple market cycles and volatility regimes. Today, he specialises in prop trading strategies, focusing on technical setups, risk management, and trader psychology. As the founder of PropIQ and a leading mentor, Andrew is dedicated to training the next generation of prop traders with proven, real-world trading methods.