14 replies to this topic

[flyers&divers]

I do not pay attention to news during the day and I do not even have news in the background.

Most of the time when I think I know what the markets should do based on news I become lost because it makes me overconfident and l usually abandon my technical parameters by holding longer, taking larger positions etc.

Sometimes when I am not trading I check various news sites ranging from Drudge to Reutres for world news.

So I know the big themes of world news and of course I know how the markets function and technical stuff.
After decades of trading I am experienced to a point where my success is in direct relation to how closely I follow my plan of identifying, implementing and following up on the frequent trading opportunities during the trading session.

In addition, all of our minds work differently. My mind gets numm reading all that stuff while others can synthesise it to a practical end.

One thing I agree on with the people who keep track of news: how the market reacts to the news reveals what condition it is in at that moment. In my case the tradeoff is between knowing that occasionally valuable piece of info and being unburdened.

This may sound like bragging but today is a prime example how one can pull off a good trade while being clueless of what is happening on the news front:

Around 1 AM I was ready to turn in when I spotted a reliable pattern in the British Pound futures on the condensed 1 minute chart, basically a downpointing flag. A textbook example of what one should act on. Not knowing the news background (and considering that I will be sleeping while the potential trade would be unfolding) I sold one lot of mini and placed an order to sell another one scale up. I also placed two buy orders way under those levels(frankly I did not expect the second one to be reached) based on technical measurements.
Guess what? While I was asleep GBP rallied a little, filling my second sell order, and collapsed to the level where my buy orders were.

What is amazing about todays markets is that because of good liquidity TA works even on the micro level.
An experinced trader can complete countless trades before a news event creates a temporary disruption to the normal ebb and flow created by human emotion.
This will only get better. I can hardly wait for the millions of daytraders from China and India to enter the markets because it will help to have seemless flow of price info.

Regards,

F&D

[Sentient Being]

I think it's natural to ask "why" certain things happen. News does move markets. I've always felt that traders who can mix technicals and fundamentals may have an advantage. .

[Cirrus]

Maybe you can trade without knowing the news but I think you put yourself at a disadvantage if you do. The news, and how traders are reacting to it, helps to set the tone of the market. It gives meaning to you bars, to the volume, etc.



I think all the factors surrounding the market are worth paying attention to. You never know when one of these factors, technical or not, may give you the clue to make a high odds trade.

IT

Exactly...

Trading in the context of the charts and how other traders react to news is another way to gain a little edge IMHO.

For example, why are oil stocks up today on some bearish news for inventory data?

[PorkLoin]

I do think one can just go by price charts. IMO Dick Diamond is a very good trader.

Rogerdodger: I think the news can push sentiment to an extreme, creating opportunity.
Is it really news? Often good news is built into price and the "news" is sold.

Indextrader: I think all the factors surrounding the market are worth paying attention to. You never know when one of these factors, technical or not, may give you the clue to make a high odds trade.

Flyers & Divers: how the market reacts to the news reveals what condition it is in at that moment.

These are also excellent comments. You get a steady drumbeat of "good news" and the market is not acting that strong (like over days/weeks) -- that's a warning signal. In the shorter term, news events often provoke price action to go to extremes where high odds trades exist, with low/risk versus higher/reward. Like something making a sideways triangle, then a news item spikes the market in the opposite direction of the trend prior to the beginning of the triangle. At the very least, look at buying a spike down and selling an upward move there.

We all have our own preferences on what to watch and what degree of trend we focus on. This stuff shakes out over the years and hopefully we find what works well and have a lot of fun, all in all.

Flyers & Divers -- thanks for the description of your British Pound trades. It is so SWEET when it works out like that. Personally, I think those "reliable pattern" trades rule.

Best,

Doug

[Cirrus]

Doug... Uranium continues to tear it up...unbelievable.