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.
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Comment by talisman on November 29, 2012 at 3:18am
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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.
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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.
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Comment by SkyNet Trading Cyborg 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
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Comment by Peter jcp on November 29, 2012 at 8:24pm -
Agree with Talisman and Skynet - news release do play a part in intra day trading. I trade intra day short term 100% technical - but will always be aware of the main news announcements - to either come out of the trade 5 - 10 mins beforehand or like today on the EU - stay in knowing a "false" breakout will happen once they have managed to pull more traders in the wrong direction.
Remember before the news is released out to the world - the people in the know - might be aware 2 hrs or even 2 days before it comes out.
It therefore can be used for either "false sentiment" prior to release or "factored" in beforehand.
Fundamentals move price - but even more important than the fundamentals - is the "players" profits - they can move anything ;-))
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Comment by Oasis on November 29, 2012 at 10:15pm
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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
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Comment by Lisa on November 29, 2012 at 10:30pm -
Hello Oasis,
I think saying the “news” doesn’t matter is different that saying “Fundamentals” do not matter.
We see the reflection or the reaction of traders on the charts (Technical*s) from the news event.
“Fundamentals” are more like the forecast, thoughts, ideas, projections and talk ...
of what will happen due to a news event.
Technical*s are action ~ what traders actually did due to the news event.
I think when you hear *news / Fundametals* do not matter, ...
that’s the premise behind that statement.
✿❀ Lisa ❀✿
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Comment by Oasis on November 29, 2012 at 10:36pm
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You are so right. Thanks Lisa.
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Comment by cristotrading on November 30, 2012 at 12:18am -
Markets use the news as an excuse to do what they were gonna do anyway. Why do we get the news when markets reach trendlines, fib zones and S/R? So i guess watching your techs in best RR then sit back and wait for the news to hit and then talking heads to say thats why that happened! Most times at market turns just watch PA when we are in 5th waves and notice how bullish or bearsih news start coming along..its just repetitive market and news behavior that people have tried to explain forever.
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Comment by Oasis on November 30, 2012 at 12:42am
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Yes that is true cristotrading, the market is quite complex with so many factors intertwined.
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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.
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