What does this mean?

Copied this from the forex articles forum. Article is Time Tested Classic Traditions for the Modern Trader to Live By (Linda Bradford Raschke):

"Successful traders buy into bad news and sell into good news."

What does this actually mean? There seems to be a lot of conflicting info about whether or not to trade news.

Squid

Hi Squid
I suspect she means that the market will be low during bad news so good time to buy and they will peak after good news which is a good time to off-load.
There are plenty of experienced traders here who when the've finished watching all the bounces this morning will put you right if my answer is too simplistic.
I never trade during announcements, not been around long enough to make any judgement call on the action.
Pete

Well that is playing on the idea that news announcements are most often already priced into a market before the news comes out. For example, if it has been expected that interest rates are going to rise in the US for the last month, chances are, the USD has strengthened on the rumour accordingly, once the announcement is made as expected, all those that wanted to buy the USD have already done so, so after a brief rise from those last remaining stragglers, the buying demand is exhausted. This is quite often where you will see some sideways movement, before the market corrects itself from the months worth of buying.

That is a simple example, but hopefully you get the general idea. My opinion anyway

Often an unexpected number in a News release will cause a stampede for the door. Some Traders trying to Get In, others trying to Get Out.

This can have the effect of price Overshooting "Fair Market Value".

Watch for signs of exhaustion of the move and be ready to pounce on the pullback to reality. Carefull, it doesn't always overshoot. You will have to have a guage on what was too big of a reaction to the news.

hth.