The News Just Serves To Confuse
I have been a trader for a very long time, so listen as I spit some facts.
News is worse than a distraction, it ACTIVELY inhibits you from making good decisions.
You have TradingView at your fingertips and it contains all the information you need, in a package so advanced it's frightening. STICK TO PRICE ACTION! I will say this again at the end.
I am 100% certain that I only started to be successful after I stopped DIRECTIONAL trading based on news. Of course, I know the broad mass of what's going on in the markets and which news events may have an effect. I haven't stopped listening to and reading the news, but I HAVE started to see it all differently.
You can see from the chart that all the recent "Shock News" has no real impact unless you are a day trader. rate decision, statements, unemployment, blah blah....
I am not saying that news is not important, I'm saying that you need to translate it and to be aware of why it is written. This probably sounds like a weird thing to say, but hear me out.
Do a memory check with me.
When was the last time that the news was all positive about bitcoin?
Answer: At the top and on the way down, when the big boys were selling it to naïve retail (like you, probably).
Now we are at the bottom, all the news is negative on BTC. I wonder why? (HINT: They want you to panic out so they can buy.)
There are three possible reasons for this.
1. The writers are dumb. They are part of the retail crowd themselves and are therefore subject to the same impulses, fears and hopes. They get carried away when things are pumping, and drop into despair when the markets plunge.
2. The whole industry is driven by the big firms, who obviously want to make as much money as they can. Retail traders are, on average, so bad at trading that brokers don't even put their trades into the market, preferring to risk taking the other side themselves. 75% of retail traders lose money. 90% of retail traders will lose 90% of their first trading account in the first 90 days. If I were a broker I would take the other side of those odds, thanks. All I have to do now is make people trade as much as possible. I get commission, and I probably get their stake as well. How to make people trade as much as possible? PUMP OUT NEWS THAT TRIGGERS TRADING.
3. A combination of 1 and 2. The financial industry, from megabanks through to news services, gurus and brokers, is set up to excite people about trading as much as possible. There is constant pressure to provide reasons why oil rose 5% or SP500 dropped 8% etc etc, and even on slow weeks the sheer amount of stories that are published is mind-blowing. The writers are unlikely to be traders themselves, and they just pump out stories based on what happened yesterday and what MIGHT happen today. It is all designed as a massive call to action that is constant, and traders just like you open (and close) positions based on "market analyst" pieces written by economists and professional analysts employed by the brokers.
Are you beginning to see how it all fits together?
The industry LOVES a day trader most of all, because they lose their stake the fastest, so day trading is promoted as exciting. After all, it IS exciting. Trading gives you a buzz. It's addictive, possibly more so than gambling. It is gambling after all, only slightly different, and if you trade like a gambler, you lose in the end.
So, how do I look at news?
1. If trading short-timeframe, I am aware of figures that are due this week, and avoid holding a position coming up to an announcement, and for a while afterwards.
2. If trading medium- to long-term, I remember that the non-farm payrolls may move the market a few percent sometimes, but when you zoom out you can barely see the effect. As a result most of my trading is swing trading.
3. I regard it as a reverse indicator if anything. It never ceases to amaze me when I am thinking about taking a long in, say, Gold, and then an email hits my inbox containing a bearish Gold story. I don't think I am becoming QAnon but I do think these stories can easily be planted by the big players. What journalist doesn't want to write a story after they interview some "master of the universe" trader from GS or JPM or wherever. Or maybe the boss says "write a Gold story today", so they call up their contact who trades it for a bank. Same effect. The banks are in buy mode, and they need retail to sell it to them.
If this sounds like I think the whole thing is a colossal rigged casino, then I am getting my point across. News is just a part of the effort to separate you from your cash, but it's doing a great job.
So, what to do?
1. Trade on Price Action only.
2. Be aware of news in case it affects a trade you may place or one that you have on,
3. Understand that nearly all news is designed to make you panic in or out of a trade, and regard it VERY cynically. It can be hard to remain calm in the face of a negative headline, but that's what a good pro trader will do. Currently I am long BTC, despite huge negative headlines.
Once again, repeat after me:
You have TradingView at your fingertips and it contains all the information you need, in a package so advanced it's frightening. STICK TO PRICE ACTION!
News is worse than a distraction, it ACTIVELY inhibits you from making good decisions.
You have TradingView at your fingertips and it contains all the information you need, in a package so advanced it's frightening. STICK TO PRICE ACTION! I will say this again at the end.
I am 100% certain that I only started to be successful after I stopped DIRECTIONAL trading based on news. Of course, I know the broad mass of what's going on in the markets and which news events may have an effect. I haven't stopped listening to and reading the news, but I HAVE started to see it all differently.
You can see from the chart that all the recent "Shock News" has no real impact unless you are a day trader. rate decision, statements, unemployment, blah blah....
I am not saying that news is not important, I'm saying that you need to translate it and to be aware of why it is written. This probably sounds like a weird thing to say, but hear me out.
Do a memory check with me.
When was the last time that the news was all positive about bitcoin?
Answer: At the top and on the way down, when the big boys were selling it to naïve retail (like you, probably).
Now we are at the bottom, all the news is negative on BTC. I wonder why? (HINT: They want you to panic out so they can buy.)
There are three possible reasons for this.
1. The writers are dumb. They are part of the retail crowd themselves and are therefore subject to the same impulses, fears and hopes. They get carried away when things are pumping, and drop into despair when the markets plunge.
2. The whole industry is driven by the big firms, who obviously want to make as much money as they can. Retail traders are, on average, so bad at trading that brokers don't even put their trades into the market, preferring to risk taking the other side themselves. 75% of retail traders lose money. 90% of retail traders will lose 90% of their first trading account in the first 90 days. If I were a broker I would take the other side of those odds, thanks. All I have to do now is make people trade as much as possible. I get commission, and I probably get their stake as well. How to make people trade as much as possible? PUMP OUT NEWS THAT TRIGGERS TRADING.
3. A combination of 1 and 2. The financial industry, from megabanks through to news services, gurus and brokers, is set up to excite people about trading as much as possible. There is constant pressure to provide reasons why oil rose 5% or SP500 dropped 8% etc etc, and even on slow weeks the sheer amount of stories that are published is mind-blowing. The writers are unlikely to be traders themselves, and they just pump out stories based on what happened yesterday and what MIGHT happen today. It is all designed as a massive call to action that is constant, and traders just like you open (and close) positions based on "market analyst" pieces written by economists and professional analysts employed by the brokers.
Are you beginning to see how it all fits together?
The industry LOVES a day trader most of all, because they lose their stake the fastest, so day trading is promoted as exciting. After all, it IS exciting. Trading gives you a buzz. It's addictive, possibly more so than gambling. It is gambling after all, only slightly different, and if you trade like a gambler, you lose in the end.
So, how do I look at news?
1. If trading short-timeframe, I am aware of figures that are due this week, and avoid holding a position coming up to an announcement, and for a while afterwards.
2. If trading medium- to long-term, I remember that the non-farm payrolls may move the market a few percent sometimes, but when you zoom out you can barely see the effect. As a result most of my trading is swing trading.
3. I regard it as a reverse indicator if anything. It never ceases to amaze me when I am thinking about taking a long in, say, Gold, and then an email hits my inbox containing a bearish Gold story. I don't think I am becoming QAnon but I do think these stories can easily be planted by the big players. What journalist doesn't want to write a story after they interview some "master of the universe" trader from GS or JPM or wherever. Or maybe the boss says "write a Gold story today", so they call up their contact who trades it for a bank. Same effect. The banks are in buy mode, and they need retail to sell it to them.
If this sounds like I think the whole thing is a colossal rigged casino, then I am getting my point across. News is just a part of the effort to separate you from your cash, but it's doing a great job.
So, what to do?
1. Trade on Price Action only.
2. Be aware of news in case it affects a trade you may place or one that you have on,
3. Understand that nearly all news is designed to make you panic in or out of a trade, and regard it VERY cynically. It can be hard to remain calm in the face of a negative headline, but that's what a good pro trader will do. Currently I am long BTC, despite huge negative headlines.
Once again, repeat after me:
You have TradingView at your fingertips and it contains all the information you need, in a package so advanced it's frightening. STICK TO PRICE ACTION!
eBook ON SURVIVAL: amazon.co.uk/dp/B0BSY763W3
THE CITY TRADERS: thecitytraders.com/?aff=9
Discord: discord.gg/Ma7SnExcWA
THE CITY TRADERS: thecitytraders.com/?aff=9
Discord: discord.gg/Ma7SnExcWA
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