Are We in for Another Week Of...

Markets retreated last week, pulling back about 2.5-3% from record levels. While the decline is modest, it is marked by several headwinds that could create further pressure this week.

Government Shutdown Reaches Historic Length

The ongoing shutdown has now reached record duration, and there's still no clear resolution in sight. Healthcare remains the primary sticking point between the two sides. Some reports suggest potential progress, but the jury's still out on whether any deal will materialise or gain bipartisan support before the Thanksgiving holiday season.

Key Economic Data May Be Delayed

The shutdown's impact extends to data releases. Market-influencing government reports, including jobs numbers and CPI data, may be delayed this week — CPI is still technically scheduled, but the shutdown could affect its release. This data delay will make it harder to gauge the economy's true direction and could inject further volatility into markets.

Earnings Season Continues to Impress

Despite these macro headwinds, corporate America is delivering exceptional results. We're seeing an 82% EPS beat rate and 77% of companies exceeding revenue expectations. While we're in the final 10% of S&P 500 reports, some important retail stocks are still due. These consumer-facing companies could provide valuable insights into spending patterns and economic health.

NVIDIA Tests Critical Support Level

AI stocks are facing pressure, with NVIDIA testing a key technical level around $180-$185. The stock experienced five consecutive days of losses before bouncing strongly on Friday with a major wick rejection. If support at $180 breaks, we could see a drop to $165. However, Friday's bounce suggests a possible retest of $193. This is a crucial moment for the AI sector leader, and its direction could influence broader tech sentiment.

Market Insights

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Key economic events

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Artificial intelligence stocks have begun to waver slightly, experiencing a selloff period in the first week of this month. The Nasdaq has fallen approximately 2%, wiping out around $500 billion in market value from top technology companies.

Palantir Technologies dropped nearly 8% despite beating Wall Street estimates and issuing strong guidance, highlighting growing investor concerns about stretched valuations in the AI sector.

Nvidia shares also fell roughly 4%, while the broader selloff extended to Asian markets, which experienced some of their sharpest declines since April.

Wall Street executives, including Morgan Stanley CEO Ted Pick and Goldman Sachs CEO David Solomon, warned of potential 10-20% drawdowns in equity markets over the coming year.

And Michael Burry, famous for predicting the 2008 housing crisis, recently revealed his $1.1 billion bet against both Nvidia and Palantir, further pushing the narrative that the AI rally may be overextended.

As we near 2026, the sentiment around AI is seemingly starting to shift, with investors beginning to seek evidence of tangible returns on the massive investments flowing into AI, rather than simply betting on future potential.

However, despite the recent turbulence, many are simply characterising this pullback as "healthy" profit-taking rather than a fundamental reassessment of AI's value.

Supreme Court Raises Doubts About Trump’s Tariffs

The US Supreme Court heard arguments overnight on the legality of President Donald Trump's "liberation day" tariffs, with judges from both sides of the political spectrum expressing scepticism about the presidential authority being claimed.

Trump has relied on a 1970s-era emergency law, the International Emergency Economic Powers Act (IEEPA), to impose sweeping tariffs on goods imported into the US.

At the centre of the case are two core questions: whether the IEEPA authorises these sweeping tariffs, and if so, whether Trump’s implementation is constitutional.

Chief Justice John Roberts and Justice Amy Coney Barrett indicated they may be inclined to strike down or curb the majority of the tariffs, while Justice Brett Kavanaugh questioned why no president before Trump had used this authority.

Prediction markets saw the probability of the court upholding the tariffs drop from 40% to 25% after the hearing.

The US government has collected $151 billion from customs duties in the second half of 2025 alone, a nearly 300% increase over the same period in 2024.

Should the court rule against the tariffs, potential refunds could reach approximately $100 billion.

The court has not indicated a date on which it will issue its final ruling, though the Trump administration has requested an expedited decision.

Shutdown Becomes Longest in US History

The US government shutdown entered its 36th day today, officially becoming the longest in history. It surpasses the previous 35-day record set during Trump's first term from December 2018 to January 2019.

The Senate has failed 14 times to advance spending legislation, falling short of the 60-vote supermajority by five votes in the most recent vote.

So far, approximately 670,000 federal employees have been furloughed, and 730,000 are currently working without pay. Over 1.3 million active-duty military personnel and 750,000 National Guard and reserve personnel are also working unpaid.

SNAP food stamp benefits ran out of funding on November 1 — something 42 million Americans rely on weekly. However, the Trump administration has committed to partial payments to subsidise the benefits, though delivery could take several weeks.

Flight disruptions have affected 3.2 million passengers, with staffing shortages hitting more than half of the nation's 30 major airports. Nearly 80% of New York's air traffic controllers are absent.

From a market perspective, each week of shutdown reduces GDP by approximately 0.1%. The Congressional Budget Office estimates the total cost of the shutdown will be between $7 billion and $14 billion, with the higher figure assuming an eight-week duration.

Consumer spending could drop by $30 billion if the eight-week duration is reached, according to White House economists, with potential GDP impacts of up to 2 percentage points total.

You've been using a 30-pip trailing stop for as long as you can remember. It feels professional, manageable and relatively safe. 

But during volatile sessions, you see your winners get stopped out prematurely, while low-volatility winners drift back and hit stops that are relatively too tight. 

Same 30 pips, different market contexts, but inconsistent in the protection of profit and overall results.

The Fixed-Pip Fallacy?

Traders gravitate toward fixed pip trailing stops because they feel concrete and calculable. The approach is easy to execute, readily automated through platforms like MetaTrader, and aligns with how most people naturally think about profit and loss. 

But this simplicity masks a fundamental problem. 

A twenty-five pip move in EURUSD during the London open represents an entirely different market event than the same move during the Asian session. The context matters, yet the fixed-pip approach treats them identically. 

This becomes even more problematic when you consider different currency pairs. GBPJPY might have an average true range of thirty pips on an hourly chart, while EURGBP shows only ten. The same trailing stop applied to both instruments ignores the reality that volatility varies dramatically across pairs.

Timeframe introduces yet another layer of complexity. Take AUDUSD as an example: a ten-pip move on a four-hour chart barely registers as meaningful price action, but on a five-minute chart it represents a significant swing. The fixed-pip method treats these scenarios as equivalent.

The natural response might be to use something more sophisticated, like an ATR multiple. This accounts for your chosen timeframe, the instrument's normal volatility, and even session differences. But it brings its own complications. 

When do you measure the ATR? Do you use the value at entry, knowing it might be distorted by sessional effects? Or do you make it dynamic, which becomes far more complex to implement in practice?

Perhaps there's another way forward that doesn't rely on abstract measures of volatility but instead responds directly to the movement of price in relation to the trade you're actually in—accounting for your lot size and the profit you've already captured. 

Maximum Give Back: The Percentage Approach

Instead of asking "how do I protect profit after fifty pips," ask "how do I protect profit after giving back a certain percentage of open gains." 

Consider a maximum give-back threshold of 40%. When your trade is up one hundred pips, the trailing stop activates if price retraces forty pips from peak, locking in a minimum of sixty pips. 

But when that same trade reaches two hundred fifty pips of profit, the stop adjusts, and now it activates at a one-hundred-pip pullback, securing at least one hundred fifty pips. The stop distance scales naturally with the magnitude of the win you're sitting on.

This creates a logical asymmetry that fixed pip approaches miss entirely. Small winners receive tighter protection. Big winners get room to breathe.

The approach adapts automatically to what the market is actually giving you in real time, without requiring you to predict anything in advance. 

You don't need to maintain a reference table where EURUSD gets thirty pips and GBPJPY gets sixty. You don't need different standards for different instruments at all. 

The same 40% logic works whether the average true range is high or low, whether volatility is expanding or contracting. It survives regime changes without requiring recalibration because it's responding to the trade itself rather than to abstract measures of what the instrument normally does.

The market tells you how much it's willing to move in your direction, and you protect that information proportionally. Nothing more complicated than that.

Key Parameters to Specify in Your System:

• Maximum Give Back Percent: 30-50% is typical, but is dependent on how much profit retracement you can tolerate. 
• Minimum Profit to Activate: In dollar amount or an ATR multiple form entry. This prevents premature exits on tiny winners, e.g., if it has moved 5 pips at 40% that would mean you are only locking in a 3-pip profit.
• Update Frequency: Potentially every bar. More frequent, but there may be issues if there is a limited ability to look at the market (if using some sort of automation, this could be programmed).

Is Maximum Giveback Always the Optimum Trail?

As with many approaches, results can be highly dependent on underlying market conditions. It is important to be balanced. 

The table below summarises some observations when maximum giveback has been used as part of automated exits.

The major difference isn’t likely to be an increased win rate. It is about keeping more of your runners during high-volatility price moves rather than donating them back to the market.

It may not always be the best approach, as different strategies often merit different exit approaches.  

There are two obvious scenarios where fixed pips may still be worth consideration.

• Very short-term scalping (sub-20 pip targets)
• News trading, where you want instant hard stops

Integrating Maximum Giveback With Your System 

You may have other complementary exit filters in place that you already use. Remember, the ideal is often a combination of exits, with whichever is triggered first.

There is no reason why this approach will not work well with approaches such as set stops, take profits and partial closes (where you simply use maximum Giveback in the remainder as well as time-based exits.

Final Thoughts

To use fixed-pip trailing stops irrespective of instrument pricing, volatility, timeframe, and sessional considerations is the trading equivalent of wearing the same jacket in summer and winter. 

Maximum Give Back trailing adjusts to the ‘market weather’. It won't make bad trades good, but it will stop you from cutting your best trades short just because your stop was designed for average conditions. 

The market doesn't trade in averages but has specific likely moves dependent on context. Your exits should not be average either.