How Does the Market News Impact Your Trading?

[Obsidian 10]

There are times the market makes us do things that we have never done before...for example we watched voting in greek parliament online...one day we focus on X, next day we forget about it as if it never existed...eur goes up and you read an article saying "eur gains on optimism bla bla..", just one hour later it goes down and you see another article saying "investors are pessimistic..." and you wonder how fundamentals change so big in a short time:roll eyes:

 

Do you change your decisions according to the market news?

[roztom 10]

I try to read the market (ES) before a report comes out. I WILL position in front of a report if everything lines up and I have a setup...

 

Of course, some major reports like Unemployment, or a report the market is especially sensitive to - I will not... I also like to get in early enough to get a scale under my belt...

 

This is especially true before a 9a cst report... If FED Day -no way...

 

I do not trade the news but if a market has a strong reaction to the news and a trend is developing I will go with a continuation trade .. I just look to see what the OTF players are doing and try to align with them...

 

One of the things I've observed over the years is that the "smart $" knows what is going to happen "most" of the time..

 

The issue is risk management IMHO, that is an individual call based on trade plan and capitalization...

[karoshiman 10]

Hi Obsidian,

 

This depends on your style.

 

I am a semi-discretionary intraday trader and not a news trader (some are) and I generally try not to take on positions 30 minutes before news events (i.e. scheduled economic indicators to be released).

 

However, there are some exceptions, in particular, if I get very strong signals so that I get the "feeling" that the market has already made up its mind and the release is only relevant if major surprises occur. But in these situations I check the release for any such surprise against the trend and I might exit immediately after such negative surprise to protect myself until the dust settles. But this "feeling" is based on experience. For a beginning trader I would suggest to stick to the 30 min. rule and watch how markets react, until you get a good feel as well.

 

Then there are events I personally call "big news events", such as interest rate decisions, FOMC statements, non-farm payrolls, or the greek parliament thing you mentioned. The scheduled ones are of course easier to prepare for. And for such special events like with greece you have to follow the news and get a feel about what the markets are looking or waiting for. I try not to take positions on the whole day of such big news event, maybe only very short-term scalping positions which take a few minutes at maximum. But basically I wait until the event is over and then I usually wait at least 30 or 45 minutes until the markets have made up their mind. I would suggest a beginner does the same as markets can get pretty wild after such events.

 

Some of these events (like with greece) can sometimes be so dominant that I might not trade 2-3 days before that, if I think the markets are waiting badly for this decision to be made. It's kind of the "theme of the week" and it's better to stay on the sidelines and do nothing until things get clearer again.

 

This approach might sound extreme to some traders, but it helped my bottom line tremendously as it keeps me out of trouble.

 

I find it more important to know WHEN NOT TO TRADE instead of when to trade.

 

So, all in all I do not care much about the content of the news in terms of 'I have to interpret it in order to base my decision on it' but more on timing and the market reaction to it. But still you have to follow the news to understand what the themes are the markets are looking at.

 

Just my

 

Cheers,

k

[karoshiman 10]

Hi Tom,

 

did not see your reply yet. Some repetition here by me... have to write faster or stop writing novels...

 

k

[Obsidian 10]

...So, all in all I do not care much about the content of the news in terms of 'I have to interpret it in order to base my decision on it' but more on timing and the market reaction to it. But still you have to follow the news to understand what the themes are the markets are looking at...

 

That is right.

I personally believe the news doesn't make the market, rather the market makes the news.