Remember, Charles Dow didn’t create his index that we today plot on our charts because he thought he’d be able to forecast its movements by reading the morning paper. In fact, he thought exactly the opposite: that he could forecast the economic cycles (in other words: prices, and thus, all the news about them) by reading the chart.
Consequently, trying to make trading decisions based on “the news” is futile. Understanding that it’s not the news that drives the market, but it’s the market that drives the news is one giant leap towards trading success.
If the above is hard to digest, imagine your friend, who works in the financial entertainment business, going to work at 7am every day. On settling in and going through all the news that came in overnight, he or she will ask his or her boss: “Hey, boss, which news do you want on the front page?”. To which the boss says: “The one that fits the chart.”
Point is, trying to trade “the news” is futile, anything that’s happened and even that that is about to, has already been priced in. What is not, or least not always, priced in yet is emerging crowd behaviour, shown visually, as price movement on our beautiful charts. (If you want to know more, or want to turn your trading around, try our Cheetah, and sign up for Premium, or simply send us a line and let us know how we can be of help.)
Mindful trading out there!
