This site is all about price action trading, in case you have been living under a rock for the past 50 years. You might be surprised to learn, though, that I rarely pay attention to forex fundamentals and news. In fact, I think the performance of a forex trader is affected when he places a great deal of focus on fundamentals and forex news. Price, in my opinion, is the ultimate indicator because it captures all the elements that affect the forex market.
I realize that a lot of forex traders try to trade the news every week or read a lot of forex news stories to see what the price will do next because I get messages about it every day. So, in our conversation today, I will explain why paying too much attention to Forex news is a waste of time and why you should get rid of this bad habit immediately.
Sell the truth, buy the rumor in forex
The old saying buy the rumor, sell the truth has been used on Wall Street for over a century for a reason. In general, the rationale is that the main market participants are the people who really move the market and they are trading primarily based on their predictions for the future and not on the basis of recently published data on forex.
We make an effort to convince forex traders that trading forex newscasts is practically similar to speculating with real money. You cannot trade on the logical assumption that a positive number in the economy will make the market go up and a negative number will make it go down because a forex trader never knows how the market will respond to any particular news release.
Because by the time the number is released, everything is usually taken into account! Because of this, professional traders and inexperienced traders who put too much emphasis on the news lose when they try to trade the news. In other words, it is a pointless trading game that looks rational on the surface but is really nothing more than a dice roll at the table.
It’s all in the price
Price is right For any price action forex trader, I believe all fundamentals and forex news releases are reflected in price action on a simple price chart and can be traded using this information. The main justification for a forex trader to believe this is the fact that only news events and other factors drive the movement of the forex market.
But the way the market actually moves as a result of it is a different story, and the price action on the forex price chart ultimately reflects that tale. A forex trader should realize that learning to read and trade the movement of market prices is the greatest shortcut to reading and trading the forex market.
Since price action basically speaks for itself in forex trading, it may be seen as a reflection of what each factor in the market has caused the trades and the direction in which the market is likely to move next.
Price action is actually the most accurate leading indicator in use because these reversals sometimes lead to recurring patterns of market price movement which are high probability forecasting tools which can be used to predict the future direction of the forex market.
So it’s really straightforward; When a trader learns to read and trade the forex market using basic price action tactics, he bases his trades on all the fundamental elements by representing the price chart of those variables as price action.
The mental fallacy of thinking more is always better in Forex
It is not always useful to have more information about the forex market, especially when studying economic and forex market news. As you know, there is so much economic data available on the internet every day that you cannot use it all.
It is a well-known fact that in the long run, traders who trade frequently lose about a third of their money as those who trade less frequently. Usually more is better in other professions, but as trading depends largely on the objectivity, discipline and patience of the trader.
The odds of being a successful forex trader will likely decrease as you analyze more and more elements of economic news about the forex market because you will over-analyze, over-think and, as a result, over-trade.
Please understand that I do not argue that Forex fundamentals and news are useless or impossible to profit from. But I would argue that a forex trader does not need them, and in my honest opinion, they usually run on the cloud and obfuscate the trader’s perspective.
One cannot ignore the efficiency and validity of forex trading only when the price movement in the market. My goal as a trader and trading expert is that the trading process is done clearly and simply without the need for economists, market analysts or complex and contradictory news factors telling me why the Euro will surely fall off the cliff because a certain country has had a terrible bond sale.
What will you do now?
What will you do now that you understand why trying to trade the news or even focusing on it too much can really get in the way of your trading? You have the freedom to decide Are you willing to admit that it is unreasonable and pointless to trade in the news?
Or will you as a stubborn trader stick to your old routine of trading the news and keep trying to predict what will happen next? The truth is that there is no way to predict what will happen next; All you can do is trade the forex market with a high probability trading feature and make sure that your winning trades are executed, your losses are diverged, and most importantly, refrain from over-trading in the forex market or using excessive leverage on your forex account.