THE TRUTH ABOUT ECONOMIC NEWS VS MARKET REACTION...

I somehow hate but love economic news as they are the one that moves the market either way, especially after a period of boring and quiet moment when hardly any trader can be seen in the market base on the low volume.

But when big news comes up, sometimes when you expect big moves upon certain "red" news, it seldom happen, but on other time when you are cruising a profitable trend, all of sudden either a simple news, rumour or an unexpected breaking news arise, the market broke out and made a sudden 360 degrees turn around.

What is the real mystery behind all these? Perhaps this element of the market is something that especially a new trader may wonder how to solve. The question is... can it be solved or predicted all the time? I don't think so...

In my honest view, these are all reasons and factors that create the 'fear vs greed' element in the market. When good news or datas are published for the US, the dollar is not necessarily going up and vice versa for other currencies.

It all depends on how the buyers or sellers would respond to these news and you know what... majority wins. This is the real answer to the mystery... nothing complicated or special at all.

Just don't count on the forex analysis report after the market reacted as these reports can be be really deceiving as they (ie I meant the market analysts) always, I mean always, report something that had happened. In those reports, most of the elements written are simply reasons from their own perspective rather than the real truth on what is going on. Remember, they always have reasons to justify whatever they wrote in there.

You can read these reports of course, just like me... but do not trust these reports 100% as they only serve as reasons on why it happened rather than what really happened.

On another perspective, the technicians on the market do somehow rely so much on their technical analysis and hence barely care these sudden jerks occurence after each news. Though technically it is much easier to predict and see the market movement, somehow fundamentals or the sentiments could not be ignored and something that a trader worth to understand and emphatize as well.

The key word here is balance... a balance approach in your trading, both that includes fundamental as well as technical. Too much on either side is bad for you. Just like driving, though you knew your car has a reliable ABS and EBD braking system that could stop you within 15 meters during a 140 km/h driving speed, you still prefer not to brake at such situation as there are risks that your brakes may not function accordingly to specification due to other factors. Get the point? Stay balance by using your own wisodm & jurisdiction...

So anyway, back to the topic above... you may wonder what is the truth behind all these?

The truth is... anything can happen. Just remember indeed that anything can happen. That is my point actually.

Using technical approach especially on Fibonacci Levels, previous low and high, RSI, Stochastic as well as double or triple zero's resistance or support is very much easier rather than trying to predict how the market will react upon certain news each time.

There are 2 main problems when you are purely a news trader.

One... you do not know what is the upcoming news or data...
Two... you definitely don't know how the market will react...

So to open a position prior to these news, or simply react upon on the market response after the news release is pretty much riskier compared to trading the market during news-free period. I have done and tried so many kind of system and strategy but at the end of the day... trust me... it's all about...

...PRUDENT RISK MANAGEMENT...

You will get it right at times, and wrong on some other times... In any kind of trade, there is no way you can get it correct 100% of the time. If you don't trust me on this, ask George Soros or Warren Buffet as I am nobody compared to these guys.

The psychology of trading, the decision making, the rationality behind each trade that you open... must be well understood and justified from at least, your own point of view. Since the money in your trading account is purely your money, don't rely on others advice or tips 100% as the fact that I mentioned above still applies... no one knows what can and will happen in the market...

Take your risk accordingly... Though the trend is your friend, but the market is not... They want your money and if you're not careful... on being either too fear or too greed... you will definitely lose in the long run...

My advice is simple... Be smart but don't be too smart... at times, just follow what the market is doing accordingly and take your share reasonably base on your target (that is not too ambitious or big...). Keep it as simple as possible and throw away your ego when you trade... meaning when you're wrong, just get out and come back later.

If you can do this... I can guarantee that you will survive and prosper in your trading career for years to come...

Last but not least... no matter what, the market is your boss... he is always right... ;)

Keep this in mind all the time...

Have A Nice Day....