市场新闻与洞察

‘Trading the news’, is a phrase that is often said, but to new traders it can be a confusing statement without much context. What does it mean to trade the news? Is it simply trading a News Company, or is it trading based on a news report, this article will explain some of the intricacies of the famous strategy of ‘trading news’.

What is it? Trading the news is simply using an event, whether it be a global news event relating to a stock or sector news or an announcement from a company as a reason to enter a trade of a on a security or a derivative. A trader can only make money on a trade if the price of the chosen asset is moving.

If the price is stagnant then there is no use trying to trade it as there will be no money to be made. This is also known as volatility. In addition, traders and investors like to trade when there is a high level of liquidity as this allows for larger position sizes and easier movement in and out of a trade.

Why do some traders ‘trade the news’? There is multiple reason that trader will trade the new, but it is largely as news events act as catalyst for a shift in share price and increase in volatility. A general rule of the efficient market is that all information that is available is priced into the share price.

However, when news/announcements are first announced, the market must evaluate the worth of the news to the share price and this can happen quickly, or it can take a few days to assess. This is where money can be made when ‘trading the news’. Example In this example we have a company ABC.

ABC is a publicly listed company listed on the ASX and it share price is currently $1.00. with a market capitalisation of $1,000,000 ABC is company that creates and sells bicycles. Now imagine that this company signs a contract to sell 1000 bikes to Company DEF for $100,000 Immediately the news will be announced and the market including traders’ investors and others will have to assess how to value the contract. This will see a rush of volatility and buying/selling of the company’s shares.

Similarly, traders can trade the news relating Foreign exchange. Specifically, news from relating to the economy or an announcement from a countries Central Bank can provide a shift to the currency which triggers traders on corresponding currency pairs. In the example below, the Reserve Bank of Australia had just announced an increase in the interest rate for the cash rate largely in line with analyst expectation.

Some notable observation about the chart includes an initial influx of volume and increase in range for the candles relative to average levels. What is ‘Selling the news?’ It has been established that trading the news is when traders will try and use news catalysts as a signal for volatility when trading, however sometimes a seemingly good news event creates a sell off that can often lead to confusion on the part of the trader who taken a buy position. The reason for much of this selling goes back to the first question.

Why do traders trade the news? The market is trying to put a value on the announcement. Furthermore, this can be compounded by what are known as ‘trapped sellers.

The concept of trapped seller is that when a stock creates a gap above a previous closing price based and that gap is above previous long terms resistance zones, sellers who have been stuck in the stock long term will sell their holding at the first opportunity. This of course creates downward pressure on the price. The downward pressure incentivises short sellers and more selling occur thus causing a ‘sell the news’ type of event.

Take the following example of ASX listed company BUB. The news events were that the company had signed a contract to supply the USA with baby formular at a time when the country was dealing with a massive shortage of the formula. As we discussed above, in this chart we can see that as the market opened.

The price gapped form the previous close of $0.485 to $0.780 as the market opened. As the day wore on it became apparent that there was a great deal of long-term sellers who were using the opportunity to either take profits or cover to cover a loss. Subsequently the stock price kept falling for consecutive days as sellers continued to ‘sell the news’ Risks ‘Trading the news’ can be an inherently risky strategy, as an influx of volume comes into a stock the volatility often increases in volatility.

This means that the momentum of. If a trader is on the wrong side of the move it can be a dangerous as the price can move very quickly. Therefore, traders should be weary and have clear stops and exits points for when a trade goes the wrong way.

Market response to any specific economic data release is far from standard even if actual numbers differ greatly from consensus expectations. Rather the market response is based on context of the current economic situation. This week’s non-farm payrolls, being one of the major data points in the month, is a great case in point.

There are many factors and of course the key one for you as an individual trader is your chosen vehicle you are trading (and of course direction i.e. long or short for open positions). The context of today’s impending non-farm payrolls from a market perspective is interest rate expectations going forward. This week the Fed gave the market the expected.25% cut that was already priced into currency, bond and equity market pricing.

The market response however, as this was already priced in, was as a result of the accompanying statement which was not as dovish as perhaps anticipated and a reduction in expectations of a further imminent cut. From an equity market point of view the result, despite the interest rate cut, was to sell off, whereas from the USD perspective this lessening expectation of further rate cuts was bullish. Perhaps this could be viewed as contrary to what the textbooks would suggest is a standard response.

So, onto today's non-farm payrolls (NFP) figure… Logic would suggest that a strong number is good news for the economy, and so should be positive for equities and perhaps bearish for USD. However, as this may be a critical number in the Feds decision making re. interest rate decisions, a strong NFP is likely to have the opposite effect. A weaker number is likely to be perceived as potentially contributory to thinking that another rate cut may be prudent sooner and so despite on the surface being “bad news”, it would not be surprising to see equities stronger and USD weaker.

It remains to be seen of course what the number is and the actual response but is perhaps a lesson in seeing new market information within the potential context of the current economic circumstances and of course incorporate this in your risk assessment and trading decision making. Mike Smith Educator Go Markets [email protected] Disclaimer The articles are from GO Markets analysts based on their independent analysis. Views expressed are of the their own and of a ‘general’ nature.

Advice (if any) are not based on the readers personal objectives, financial situation or needs. Readers should therefore consider how appropriate the advice (if any) is to their objectives, financial situation and needs, before acting on the advice.

We frequently refer both in the articles we publish and the weekly “Inner Circle” sessions we present, to the benefits of a trading journal. However, the reality is that many traders make the choice not to measure trading despite the logical benefits of doing so. Whether you do or don’t currently, the bottom-line decision you are making is not only whether you do or don’t but how that positions yourself with your trading development.

We would suggest that this overall choice can be broken down into the following three sub-choices. You can make the decisions that are right for you subsequently. Sub-choice 1 – Measuring your system You are either making the choice to: Have certainty on not only whether your trading plan as a whole can create positive outcomes but have evidence to know which component parts of your plan are e.g. indicators you use for entry and exit, comparing strategies you trade, timeframes that work best for you, (and which are not) contributing to such outcomes.

Additionally, it allows you to compare what would happen if you change some of the perimeters on your potential results. OR You have no evidence as to whether your system as a whole and its components parts are working well to serve you in getting the results you desire. Nor do you can test and gather evidence as to what the impact of nay changes you may make to that system, Ask yourself… If I am serious about trading results which choice should I make?

Sub-choice 2 – Measuring you as a trader You are either making the choice to: Know the degree to which you are following your plan or otherwise so you can ultimately make a judgement on: a. Whether your system is working for you (all the points in sub-choice 1 above CANNOT be made unless you are following your plan religiously). b. What you need to work on in terms of tightening your behaviour e.g. on exits or entry c.

Whether there are certain market conditions which you find difficult or are ill-prepared for (so you can fill any knowledge gaps or avoid in the future). OR You can continue to trade as you do, avoiding any self-assessment and growth, and the refinement of your behaviour that may contribute to more positive trading outcomes. Ask yourself… If I am serious about trading results which choice should I make?

Sub-choice 3 – Improving your trading (closing the circle) (let’s assume you are keeping a journal for this one) You are either making the choice to: Measure with purpose that has clear follow through into further development and refinement of your trading plan and subsequently your actions. This facilitates the development of you as a trader based on your individual character and trading style. In practical terms, you ‘close the circle’ with a defined review and develop an action plan based on your review to test and change parts of your plan.

This is evidence-based trading! OR You can measure for measurements sake to on the surface appear to be “doing a right thing” but in reality, failing to unleash the real power of journaling, that is to make an on-going and continuous positive difference to your trading outcomes. Ask yourself… If I am serious about trading results which choice should I make?

In summary, if you have made the choice to read this article to its end you are left with one ultimate choice…to journal or not to journal including the three sub-choices that dependent on which you are making can impact on your trading. So, for one last time, Ask yourself… If I am serious about trading results what should my actions be with what I have read in this article? Our next steps and Share CFD education programme both have indicative trading journal templates to help get you started, and we would be delighted if you could join us.

Mike Smith Educator GO Markets Disclaimer The articles are from GO Markets analysts based on their independent analysis. Views expressed are of their own and of a ‘general’ nature. Advice (if any) are not based on the reader’s personal objectives, financial situation or needs.

Readers should, therefore, consider how appropriate the advice (if any) is to their objectives, financial situation and needs, before acting on the advice. Find additional Forex trading education resources here. Next: 5-point checklist for using chart patterns within your tradin

Success leaves clues, and over the years as an educator and coach, I can confidently say that there are several things that traders who achieve positive trading outcomes appear to do, that less successful traders are not doing. One of these is to have a daily agenda or habits that go alongside direct trading activities with the aims of getting and staying in the optimum “state” to trade and to facilitate consistency in action. Here are 5 observations to consider… #1 – Check in on your potential “trading state” before you look at the market We have discussed in previous articles the advantages of making decisions when you are in an optimum state to do this.

I highly recommend you read my 10 Ways to Manage Your Trading Psychology – a Blueprint for Development post if you haven't already. If one constantly interacts with the market, consistent and constructive action may be more difficult. Therefore, logically "checking in" where you are before you start your trading day becomes even more necessary.

It may be there are things going on in your non-trading world that are significant enough to be a justifiable distraction and require attention, or you are not in the best of health. However, it's important to realise that the markets WILL always be there. There are times when it is good to trade and times when you should give yourself permission not to. #2 – Re-align with trading purpose and plan at the start of your trading day Your trading purpose, or your reason for trading, is your start point for developing strategies that are consistent with your trading objectives.

Your trading plan is your “guiding light” in making this purpose happen. Every trading decision should relate to these, and without it, traders have a lower chance of creating the trading outcomes they desire. In the “heat of the market”, it is easy to get “sucked in” to the price action of open trades as you see your trading capital moving up and down.

Without the explicit instruction of a pre-prepared plan, it becomes more difficult to maintain the consistency and clarity that it is already characteristic of experienced traders. Touching base, or re-aligning with these at the start of your trading day offers a reminder as to the why and how you will think, decide and act in the hours to come. #3 – Make a judgment on what to expect Every day the market throws up different challenges, different price movements, volatility, and new economic information, influencing overall market sentiment. Advanced traders take the time to make an overview judgment on what is happening and adjust decisions on time-frames traded, risk level or chosen strategies, accordingly.

For example, one of the possibilities we have discussed in a previous article and in Inner Circle sessions is the concept of adjusting risk level according to the strength of the signal or underlying market conditions. What we mean by this is that if our normal tolerable risk level is 2% of our trading account capital on each trade as a standard and we note increased market uncertainty indicated by higher price volatility, but identify a potential opportunity for entry, we may adjust that risk level to 1% in light of this observation. Having a system to make a judgment prior to trading allows this sort of approach to be taken, making it an unquestionable attribute of an experienced trader. #4 – Check in with yourself at key points during your trading day Your emotional state can, and often will change throughout your trading day, primarily dependent on either the results you are getting or your judgment on performance.

We are all familiar with the concept of ‘revenge trading’ if a trade, or series of trades move against you. This is at the extreme end of capital damaging emotional state. Equally and more insidiously dangerous is a succession of wins or losses where your consistency may waver, either originating from a belief that you can perhaps “feel the market” or begin to doubt yourself as a trader.

A potential solution is to have it written in your plan that if either of these scenarios is the case, then you could move away from the market for a period of time, enabling you to reset, re-align and revisit the market later on with a refreshed sense of purpose and plan. #5 – Review your day including completion of journaling tasks Formal review of performance is a critical part of on-going trading development. We have discussed many times the benefits of keeping a journal record of your trades, within not only measure outcomes, but the decisions that were taken to create these. Completing your journal daily may identify common threads of both things that went well (and you can mirror going forward) as well as potential areas for development.

Experienced traders who do this give themselves that important chance of sustainable growth which appears to be a key factor in long term trading outcomes. To summarise, you always have a choice as to whether you integrate what you read into your trading. In this case, it is the choice of having a daily agenda that can contribute positively to your long term trading strategy.

Every week I run education webinars offering innovative and comprehensive learning across all aspects of trading knowledge and practice. If you would like to expand your knowledge and build your confidence as a trader while also connecting with other Forex and CFD traders, register here.

One of the most common questions we are asked on some of the webinar sessions we run is “What timeframe might be best for me to trade?”. This slightly longer article than we would usually write, seemed merited to provide some detailed “food for thought” as it appears to be an important issue for many. This is not something we can answer for you as an individual, as which timeframe(s) you choose to trade is a personal choice, but the purpose of this article is to put forward some of the considerations that you should contemplate as you make this decision for yourself.

Generally speaking, and to offer up some sort of definition for the purposes of this article, traders choose to trade: Shorter (fast) timeframes intraday (1-15 mins) Medium timeframes intraday (30mins-4 hourly) Longer (slow timeframes) daily (4-hourly-daily) There are usually two common motivations that may lead the trader to consider a change in the timeframes they are currently trading: a. Having difficulties “fitting” trading around other life activities. b. Believe that changing timeframes may produce improved results (or same results with less impact on lifestyle).

Before moving on further, and particularly if in the “b” group ask yourself this key question: Should I be considering a timeframe change at all or are there other priorities I should have? Before considering a timeframe change, we assume that you have the following in place: You have a written trading plan/system that specifies entry, exit and position sizing criteria AND the timeframe(s) you are currently trading. You look at the market before making any decision related to entry (including pending orders), initial risk minimising exit (stop loss), profit targets, and any trailing of your initial stop.

You consider economic data/announcements as part of your decision-making processes and understand the different impact that different types of “news” can create. You have a method through which you can determine the success or otherwise of the decisions you make including that of timeframes traded (e.g. a trading journal). If you do not have ALL the above in place, then perhaps your priority may NOT be deciding whether to change timeframes.

So, with a tick placed by the above, if it is right to consider a change in time-frame, there are commonly three overview factors to consider. 1. Your access to the market (screen-time – how much and when). 2. Flexibility (how frequently you can touch base with the live market). 3.

Competence and understanding relating to the practical trading implications of any timeframe including trading set ups and risk management including position sizing. Let’s explore these in a little more detail with FOUR key considerations: 1. Technical considerations Here is the good news…The following are relevant in ANY and MULTIPLE timeframes: Chart patterns Candle information Indicator usage in entry and exit systems If you are moving to a longer time-frame consider: Differences in key chart values (e.g. volatility).

You need to adjust your thinking in terms of what is the norm for the timeframe you are looking at. So, for example a 40 pip move in a 4-hourly chart may be the normal value whereas on a 15-minute chart this would be a massive move. Key data times.

There are critical points in the day where there may be several economic data releases in a relatively short time-span. These usually coincide with the opening of relevant equity market open. So, for example most of the significant data out of the US will be released within a two-hour window straddling the US stock market open (8.30-10.30 US EST).

Hence price action seen on charts, will usually be at its most active during these times. Get to know these if you are trading longer term timeframes. 2. Risk and position size considerations: With faster timeframes, traders generally: • Open larger positions with the trading idea of a smaller Pip move. • Have a tighter Pip stop loss as even smaller movements impact significantly on dollar outcome. • Are aware the even “less significant data” can create more relative market “noise” and need to have this factored into trading entry and exits decisions.

With slower timeframes, traders generally: • Open smaller positions with the aim of a larger Pip move. Tighter Pip stop loss as even smaller movements impact significantly on dollar outcome. • Have a wider stop-loss as smaller movements irrelevant and so there is less chance of being taken out by price movement “noise” within a longer price move. • Are aware that relative major movements are from major data points (and therefore need to learn what these are). 3. Practical considerations Firstly, look at the time you have to invest in your trading (and this may be subject to negotiation with partners etc., and of course with what else is going on in your life).

If you are planning ring-fencing screen time, for example a couple of hours per day, then giving the attention to trading shorter timeframes may be more viable. If it difficult to access larger amount of “block” time but short frequent touch base with the market is possible, then longer timeframes may be more suitable. Generally speaking, to give an example of how the latter may work in practical terms, you may have a trail stop strategy that you wish to adjust at the close of each candle/bar.

If this is the case, then if you can check in hourly, an hourly timeframe may work for you. Four other things to consider: Even if trading longer timeframes some trader choose to use a shorter timeframe to ‘refine’ entry, if trading a daily chart. After entry, as stated previously you should subsequently stick to the longer timeframe for decisions.

If trading shorter timeframes, many traders use a daily chart for the “big picture” to identify long term trends (to avoid trading against these) or to identify longer term key price points (e.g. well-established support and resistance). There are some trading approaches that are promoted as being daily approaches e.g. Inside bar.

Holding costs are associated with daily chart trading and of course you can touch base with your account manager for further clarity). 4. Mindset Considerations: Any article on just about anything to do with trading would not be complete without some reference to the psychological and subsequent behavioural aspects of the topic. Here are some of the common mindset issues to consider: With shorter timeframes: • It is easier to get sucked in to watching price movements (i.e. ‘staring’ at the P/L column continuously) that may evoke emotional decision making rather than be based on your trading system and CHART price action. • Short term trading is perceived as being more “exciting”.

If you find this resonates ask yourself are you really trading for excitement or for profit? • Your business is “done for the day” when you are finished trading which means you are not “distracted” by the market when other life things should have your focus. With longer timeframes: • Not generally “peddled” as an advantage of FX trading by the “gurus” out there. Therefore, it may feel that to trade daily charts is going ‘against the norm’ and may feel uncomfortably strange at first. • If you have traded shorter timeframes previously, it is a habit you may have to work at breaking and resist the temptation to take a “sneak peek” at shorter timeframe charts, and alter your decision-making. • There are many “experts” you will see wheeled on to give an opinion on CNBC, Bloomberg etc that have a prediction about what may happen in the future to any currency (or index/commodity if trading CFDs).

Remember: a. These “experts” are not your ticket to riches but are there to make interesting TV as well as provide some insight. Indeed, you will often find contrary experts brought on at different times in the day.

Their opinions should be viewed as you would with any “hot tip” i.e. thank you ‘Mr Expert’, but does it fit my trading plan? b. There is a greater temptation to move away from one of the golden rules of system trading i.e. “Trading what you see rather than what you think” (or what the experts think)”. • May occupy thinking throughout the day and so may be more difficult to “let go” and give the focus to the rest of your world outside trading. And to finish….

What happens next is down to you! If you haven’t tried to trade longer/shorter timeframes why don’t you test it out (but see point re, should it be your priority). Trade as you do now LIVE and trade different timeframe on demo.

Compare not only the results but the impact on the rest of your life activities. Journaling may help. You may make the choice to trade multiple timeframes.

If you do then you should make sure this is reflected in your trading plan/system and what market circumstances would lead you to trade which timeframes. We trust that this has been useful, even if the outcome is that you make the decision to continue to trade your current chosen timeframes and of course please feel free to share this article if you think it would benefit others (it’s easy just click on one of the social media links to make it happen). Finally, if you are not part of the growing GO Markets ‘Inner Circle’ community, where you can access weekly education sessions, you are invited to join our Facebook group "Time For a Change?

Considering Longer or Shorter Timeframe FX and CFD Trading " is written by Mike Smith - an external Analyst and is based on his independent analysis. He remains fully responsible for the views expressed as well as any remaining error or omissions. Trading Forex and Derivatives carries a high level of risk.

For more information on trading, check out our forex trading webinar.

Using profits targets in trading, irrespective of trading vehicle chosen (e.g. Forex, Index/commodity CFDs, Share CFDs), is commonly discussed as potential exit strategy. The reality however is that these are often executed with a lack of consistency with ambiguity in trading plan statements.

This article revisits profit targets and outlines some key issues to consider in your trading plan. The terms “take profit” (or T/P on your trading platform) and “profit target” are interchangeable. What do we mean a profit target?

Like a stop loss, (though obviously related to taken a profit rather than a loss), a profit target is a pre-set price point (decided on entry) at which you have chosen to exit. The main two considerations as a trader are: When do I use a profit target? Where do a place it?

When do I use a profit target? Essentially there are three choices namely never, always or intermittently. These invariably tend to match three distinct trading styles of the individual trader.

Those who NEVER use a profit target tend to be shorter term traders (less than 30 mins time-frame) who are “in the market” for a set period of time during the day and will close all positions at the end of their ring-fenced time. Ideally there with associated use of a trail stop system. Those who ALWAYS use a profit target go across multiple time-frames, still using an initial and trail stop but often either use: Key price points i.e. placed above the next support if in a short trade or below the next resistance if in a long trade.

A multiple of risk e.g. if using a 2:1 ratio then x2 the risk level. Using this ratio as an example if your initial stop is placed 10 pips below entry in a long trade then the profit target is placed 20 pips above entry. Even if one is using key price points as your norm, this may be useful in those situations where no previous technical landmark exists e.g. when a price hits a new price high.

Those who PARTIALLY use a profit are commonly those who will trade without one whilst watching the market but when they move away will put one in place e.g. when holding a position overnight. So, your first choice is simple, which of these three is a ‘fit’ for you. Where do I place it?

We have spoken previously about the need to be specific in your plan to facilitate consistency and measurement. As with any other component part of your trading plan, your profit target is no different. Here are some suggestions: If you are choosing a key price point as your guide to placing your profit the be specific regarding how far away.

Please note: to use ‘Pips”/Cents/Points may not translate across time-frames e.g. in technical terms 10 Pips above a support in a 5 minute time-frame is very different relatively speaking to 10 Pips on an hourly chart. Therefore, it may be worth considering something like an ATR (or fraction of) which takes into account the standard movement in a particular time-frame e.g. 0.5 ATR above an identified support level. If you are choosing to use the concept of risk/reward ratio as previous discussed, then your placement of profit target is dependent on the initial stop level you set.

Then this becomes a simple maths calculation. So, absolutely clarity about how you are placing this initial stop e.g. technical landmark is the specificity that you need to work on. And finally… Bear in mind of course that: Other exit strategies that are part of your plan for open trades such as your initial and trail stop or your approach when there is an imminent economic announcement are still part of your decision-making, even if you have a profit target in place.

These need equal unambiguity when articulated in your trading plan as with your profit target. Once you have ‘planted your flag’ and of course traded your specific plan with a critical mass of trades, you are then in a position to test different parameters e.g. alternative distances away from a key price point. Your mission from here is to decide whether and how you are going to use profit targets and subsequent to write placement details in your plan...and then of course follow through with the discipline to trade it.

Mike Smith Educator and course facilitator GO Markets Disclaimer The article from GO Markets analysts is based on their independent analysis. Views expressed are of their own and of a ‘general’ nature. Advice (if any) are not based on the reader’s personal objectives, financial situation or needs.

Readers should, therefore, consider how appropriate the advice (if any) is to their objectives, financial situation and needs, before acting on the advice.