Trading News

Some traders love market news , because news often makes the market move , and these traders thrive on volatility. Other traders hate news. They feel that news cloud their views of chart patterns , technical indicators , cycles etc. At times I do not understand why markets seemed to move contrary to the news. Many experienced traders capitalize on the news by following the old adage ” buy the rumor , sell the news. ” Are you in this category ?

Some of my trading gurus ( teachers ) told me not to trade during news release or during earning seasons. This kind of advice is debatable. As I progressed and learned more about the impact of news on market , I begin to observe some cogent points to consider in relation to the news …

In trading , the market response to the news is even more important than the news itself. One would also wonder whether the market anticipates the news before the news is published. Anticipation is not a game for me.

Bullish news in a bear market often have a minor or temporary effect on prices. If prices fail to return to pre-news levels or drop after an initial bullish response to the news , then a change in trend may have occurred. The opposite can be said about bull markets.

When a major news is favorable to the existing trend , and yet fails to evoke the expected response in the market , then there is good reason to believe that the trend is changing or has changed.

Hence I prefer not to trade before or during news releases which may affect my trades. News do confuse me at times. I would rather wait for the market to digest the news before I look at the charts again …