Trading news and sentiment

Congratulation, made 55 pip between E/U and U/J, took my profits early could've got more then double that if i stayed in, but its better then nothing.
Trading the NOK is bold, i don't trust these low liquidity paries, what broker do you use?.

The only reason I am trading nok is oil and they are likely going to raise rates tomorrow (was in it since the AM). My broker is fxpro. Congrats on your win.

You won't be alone in that category. Making money in this market is a lot easier if you know why price is moving and identifying the same opportunities the professionals identify. Technical analysis on its own is probably the biggest con ever sold. It is like the dangling carrot. It gives you just enough hindsight to apply any narrative and enough success to keep people trying while the elusive success ultimately is never realised. Very few can manage success with it and out of those that do, it never lasts a full economic cycle. I have never in 20 years in this business seen a technical only trading account last beyond that. Maybe this is because so few actually manage it or maybe its because nobody can. Why face an insurmountable challenge where you have a great chance of becoming another statistic when you can work smarter and give yourself a much more achievable goal. Think about it, if banks could make it work then why do they invest shed loads of money on news terminals and analysts if they could just use technicals.

I know that mixed with fundamentals you have a greater chance of success with technicals so long as you understand fundamentals and how to apply it. I wish you all the best on your journey. Just unlearn and relearn and with 3 months of hard work you will start turning a success. I might blog about this next to help you and others like you understand what is needed and get going down this path and why 3 months is enough to start seeing a change in your success.

Please do so, it will greatly benefit me and others indeed.

I was thinking that I need to study the MIT open course-ware for Economics because I have to speak, think and imagine like an economist. It's a lot of work but i'm not really fazed by the difficulty.

And yet, it's a subject that is not easy for a layman such as me. When new news events come up and I am feeling lost as to what it is or what it means.

And I think the problem with Technical Analysis is how it always lets you focus on the past and therefore, encouraging you to drive forward by looking a rear view mirror. It is this deeply-ingrained bad habit that makes me feel that i don't know what I am doing and what needs to be done, worse is the fear of missing out and rushing to get things done thereby losing money and time and building frustration.

Hi Ecotrader, great job you are doing here, please which pairs do you think we should be looking forward to today

More dollar weakness, nok, and sterling (brexit related)

Which NOK pair you are trading ?

You don't need to be an economist or have a degree. All you need to do is use the web as your resource to find out what something is and how it works. You just need to know enough to understand how it all fits together and how to interpret central banks. Economic data is easy and there are plenty of freely available resources to read up on (only focus on the red and orange ones on fx factory calendar). The research is focused on central bank policy, speeches, lingo, then economic data and understanding the dynamics of each economy (is it service based, commodity, agriculture, manufacturing. What relationship does it have with other major economies. Is the currency a safe haven). All this info is freely available and won't take years to understand. I was in the same position and started to see a difference in 3 months of self education.

What is expected of the coming news from Switzerland about monetary policy

not much, they are in an expansionary mode and not looking to change anytime soon. It would take a hawkish SNB to provide any significant reaction and that doesn't look likely.

Brexit news of shorter extension period has sent the pound lower. I took 10 pips from the reaction to it

Thanks Ecotrader for taking time to respond

Selling all the way and stacking on GBP shorts

40 pips bagged from USDNOK (interest rate hike)

Hi, what you say about EU Economic Summit ? Whats your opinion about this meeting ? Will have impact on EUR or GBP ?

might do but will come in the form of unscheduled news. It would be regarding Brexit so eurgbp would be the one to action if it happens

I am a more conservative than you are. I will join in if there is a good catalyst however.

I promised i would blog about the research required to get going so here it is:

Your starting point is basics on how an economy operates. You don't need an economics degree just understand that economies run in cycles revolving around debt.


During expansion central banks loosen policy making money cheaper and more abundant. This stimulates businesses to lend and expand which creates growth, jobs, productivity etc. Growth causes inflation as demand for goods and services increase and central banks once again have to keep things in check and do so through policy. They can raise rates making money more expensive, they can reduce the amount of money in the system, and they can alter banks reserve requirements forcing them to lend less. There are other tools but these are the main ones. When money gets more expensive and unavailable this slows down an economy and eventually you get a recession. This is a natural part of the debt cycle (there is actually a longer 75 year one also but that isn't important - yet). Central banks then loosen policy and the whole process starts again. The average cycle lasts approx 56 months.

So it should be clear that central banks are critical to stability and they hold keys to controlling a cycle and managing it in a way that doesn't adversely affect the economy. A currency will lose value when a central banks policy is loose and gain value when central bank policy is tightening. This is the medium term trend of any given currency and is central to all successful fundamental analysis. So your next point of call is studying central banks, their policy, and communication. They all have websites that detail their mandates and their tools. Use a web search engine to research any areas of this you do not understand until you understand exactly where it fits and how it is used. There are many free resources available for this and you don't need to be digesting 1000s of pages to achieve the objective. When you have a good understanding of their framework, tools, familiar with the board of governors and their schedule, then you can move into studying their policy. Again any terms you don't understand will require research. You need to be able to read a central bank statement and understand immediately what their focus is, what they are watching, if they are applying any tools and what affect those tools have. This will form the basis of your knowledge for an economy.

Your next step is to look at economic data. You don't need to be picking over every data point as it is not going to help you and likely overwhelm you. Focus on the areas mentioned in the policy and add to that other key gauges of an economy (employment, GBP, inflation, trade, production, services etc). Each economy will be slightly different and some will be more service based,others manufacturing, others commodity and agricultural. The goal here is to get a general idea of how it is going and align that with what the central bank is saying.

Your next step is to find out what interrelationships, if any, there are that can play a key role in affecting an economy (external factor). China for example is critical to Australia. This knowledge is valuable in understanding how news flow might affect a given currency.This should also extend to other markets like commodities. Oil for example is a key influencing factor for the Canadian $.

Lastly, get a good understanding of any political themes in the economy that might play a role on the affecting sentiment. Brexit is an example of this and it can be very lucrative.

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This needs to be done for every economy you plan on trading so you will need to keep a journal to track and refer back. Once you have a good understanding you can begin the daily process of tuning into sentiment. This is driven by news flow either economical or political. for economical you need to be focusing in on the general trend (central banks) and economic data that is different from expectations. Do not trade releases where the data is within the expected range. You should rather be looking for those that aren't because this alters sentiment and causes the new information to be priced in (essentially its a prediction act of what the data will do to central bank policy). Use sentiment and central bank policy to build a list of strongest and weakest economies as you will be pairing these together for the best opportunities. if an economic data point is released and it is better than expected by a good amount then buy it against a weaker counterpart. The best opportunities are those where the data point is actively mentioned in central bank policy.

This is all i have time for at the moment but i am sure it will raise a number of questions so feel free to fire away and ill answer when i can.

Thanks for your time and effort. All the data from UK today are green, but pound still fall. Is it that sentiment for/against is a currency determines its direction much more than data?

sentiment is normally driven by economical data but can be overridden by other factors. In the case of the UK, Brexit is dominating all other factors (Political driven). This is why it is important to include more than standard economical factors in the analysis.