Who says fundamentals are not important

In my short (3 years) trading experience I have come across technical based traders who have said that they do not bother about news releases. I have always found that hard to believe and felt that it is perhaps 'politically correct' for them to say that.

Yesterday there was at least one post that suggested that going short on GBPUSD was a good trade. I checked my charts and indeed it was for a large profit target. Today the US new home sales data was disappointing. Until that news release, GBPUSD and EURUSD shorts were in great shape, as was long on USDCAD. The markets immediately reversed and have not still recovered.

Also remember that this is not even the NFP that we are talking about. 

I can post a chart here but do not think anyone needs that to confirm what has happened.

So I think it would be a fallacy to say/think/believe that news does not matter. If you think otherwise I would love to hear why.  

Views: 681

Comment by talisman on November 29, 2012 at 3:18am

news should probably play a much larger factor in your trading the smaller the time frame you trade.  longer term market direction is usually not significantly affected by any one news item.  this is probably why newer traders are often discouraged from trading very short term.  they generally don t have the ability to allow for short term volatility caused by fundamentals. 

 

Comment by Oasis on November 29, 2012 at 6:36pm

Yes Talisman that is true. The notion that news can be ignored is something that I just don't think is correct for either form of traders.

Comment by CodeMaster on November 29, 2012 at 7:13pm
It's puzzling that you couldnt see that usd related pairs were at extreme levels prior to the release. If you are looking for reasons, news releases will do I suppose....any port in a storm. More often than not the news explains what happens after the fact......just my take. If you want to trade of releases good luck figuring out which ones big position traders ignore regardless of the number and which ones they change direction on......kind regards. At times like this I usually hum that pink floyd song welcome to the machine
Comment by Oasis on November 29, 2012 at 10:15pm

Thanks for you comments SkyNet Trading. First of all I have never said nor do i trade the news. On the contrary, I try to stay away from trading at such times as Peter jcp mentioned.

 I do also sense an element of sarcasm and ridicule. Sometimes experienced traders forget that trading skills are not a part of formal education (taught in schools/universities) and are acquired by self study and it takes years of experience to achieve a reasonable level of competence. You have guessed already that I am in the early stages of this process,

I do request your help in understanding " usd pairs were at extreme levels prior to news release".

I am attaching my daily G/U chart that shows that at the time the price was bouncing off the falling upper trend line. My interpretation was a big move to the downside, which did progress quite some distance before the news came and it reversed.

Appreciate your help with this.

Regards

Comment by Oasis on November 29, 2012 at 10:36pm

You are so right. Thanks Lisa.

Comment by Oasis on November 30, 2012 at 12:42am

Yes that is true cristotrading, the market is quite complex with so many factors intertwined.

Comment by BlueWhale on November 30, 2012 at 11:30am

after 4 years of trading, this is what i think, No one knows for sure which direction the news will take off, or fake out. Thats why their not important, Market is gonna do whatever they're gonna do anyway, like cristo said. I disagree with talisman, fundamental is important for position trading(longer term), where interest rate trends,big macro news, or mr ben speech plays a part.
For spike news, they're irrelevant. Either to a short term trader or long term trader. They're just spikes or volatility that opens up better opportunity for you to fade. 

You can ignore news and still be profitable totally. Just knowing there is news at that certain time is enough, dont have to read it or know what it is.


My humble opinion.

Comment by Haitham653 on December 3, 2012 at 8:02am

I do say !!!!

Let's take the EURUSD as an example:

First of all I'm gonna ask you a question!!!

What is the chart !! or What makes the chart move !!!

Simply chart move of EURUSD is  a reflection of what is happening in the real world in the EURO zone and in the United States, and what things that makes the chart move !!!

Simply they are:Supply and demand, fundamental news, politics, rumors, natural disasters such as earthquakes, snow, heavy rain , cold winter, or a very hot summer...etc!!

Yes fundamental data is the most important but in some cases the market challenges the released data and moves against it ....  

When data is released we can see its impact on the chart , so by studying the chart technically we could predict the future move  since history repeats its self most of times !!!

If I'm a good technical trader , who trades with good long term plan with good money management !!!

I might loose a trade in a bad day full of fundamental data, but since I use long term strategy , I'm sure 100 % I'll make it up later...so I don't care !

I would summarize all of this with few words, EURUSD's chart is a reflection of what happens in the real world in EURO zone and United States !!!

By studying the chart we could predict the next move correctly over 70% ..

I've tried before to combine between fundamental and technical analysis , yes I avoided some bad trades but in return I also missed too much profit !!!

I think it depends on your trading strategy !!!

Anyway, I think fundamental analysis is good for position(long term) traders !!

As an intaday trader , I recommend the 1 hour chart and below !!!

Best Regards

Haitham

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