I get asked a lot about how to trade the news, how to profit from news releases in the Foreign Exchange market, and at the same time, I get lots of challenges from pure technical analysis traders who just dismiss everything about news as if it is almost like a blasphemy against the technical analysis’ religion to even to consider something outside of charts and candlesticks… I can’t really say for anyone else, but this exact type of thinking is what got me into trouble in the first place when I was starting out my trading career. I had to re-learn things the hard way, but I often wondered, if I were to start over, it would be no doubt in my mind that I would be studying BOTH technical AND fundamental analysis, instead of avoiding it (fundamental analysis, news releases, etc…) like a plague.
For those who are pure technical analysts, or chartists, this is not a challenge. I know what you’ll tell me, that anything news can tell me, your charts will tell you as well. But I guess the bottom line is timing, and if you missed the right entry timing, you are looking at a difference between winning or losing trades. Therefore, why not use everything at your disposal? After all, us traders are not idealists defending a principle, we are capitalists seeking profits. If a little modification brings you more winning trades, why not use it?
While I am not going to get into defining neither fundamental nor technical analysis in this video, I’m going to point out how to use both methods to trade the market so that you can understand the value of seeing the market in its entirety, in the context it is meant to be in. And having understanding of the entire framework of the market, will help you generating profitable trades, day after day, weeks after weeks, and months after months.
Please watch carefully as I analyze the market in this video, I explained the following:
- Retracement Method in News Trading
- The “personality” of USD/CAD
- The importance of psychological levels (i.e. parity) – Market Insight
- Technical Analysis – Support area for USD/CAD (2:28 “…we need to take out this area first”)
- Buy on Rumor & Sell on News effect (3:35)
- News Release (4:55) – Buy on USD/CAD called as fundamental analysis called for this action
- Buy order executed (6:00)
- Congestion area (stalling 8:00)
- USD/CAD “personality” explained in detail (8:10)
- Trade management – (9:18)
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