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Posted on Jun 16, 2020 at 07:18 PM
Read the Chart, Not the News!
In the first post on this article, I promised to shed more light on how to use the resulting price action to from News events to affirm your Technical Analysis. (If you are yet to read the previous post, STOP and read it, to get the full picture. Click here to read it now)
It’s a simple skill; Read the Chart, Not the News
I prefer sticking to my technical analysis because it tells me the result of any Forex news event. Better still, it paints a collective and objective picture of what just happened.
So instead of trading what I think will happen or should happen, I’m trading what actually happened because I’ll have had hours to assess whether the market sees the event was positive or negative.
At the end of the day, the market’s opinion is the only one that matters.
It doesn’t care what you think, and it certainly doesn’t listen to your opinion.
I want to dig deep here because what I just stated is the root of the problem with most new traders.
Individual opinions are what get traders into trouble every time.
Let’s face it, opinions and egos aren’t exactly a scarce commodity in the Forex market.
Each week, from our numerous Forex traders, we get hundreds of calls & messages. One of the most common questions we get asked is whether we think a particular news event will be positive or negative.
Traders want to know whether we think a central bank will raise rates or not at their next meeting or if NFP will be bullish or bearish.
But here’s the thing…
It doesn’t matter what I think or what you think.
The only thing that matters is what the market thinks. That’s it!
This same type of question gets asked about past events as well. For instance, a non-farm payroll (NFP) report comes out, and the numbers jump to the upside yet the U.S. dollar weakens (e.g. due to prolonged protests on George Floyd’s death).
Inevitably, we get questions like “non-farm payroll was negative, so why did EUR/USD fall?”
If you’re a Trend trader like me, it doesn’t matter why it tanked. And if you feel a burning desire to answer the question above, perhaps you’re better off becoming a fundamental analyst.
My point is this…
If you understand Technical Analysis & can recognize various trend patterns, then forget about trying to figure out how the news will impact the market except you want to scalp.
The same goes for past events. Don’t bother trying to figure out why the U.S. dollar fell after a positive NFP report.
Just pay attention to the trend & price action. That’s all you need.
Know when Forex news events are occurring, but don’t try to outsmart the market. Those who do are usually disappointed with the result.
Not to mention it will drive you mad trying to figure out why the market did what it did.
Lastly, in the concluding series, I will explain how I handle volatile News events, click here to read the final series now and if you've got any question on this episode, feel free to leave it in the comment section box below.