Trading news and sentiment

I wanted to touch on news sources for those that are unsure.

https://www.actionforex.com/category...ntal-analysis/

Has detailed analysis and is a valuable source for getting a feel of general analysis. There can be multiple articles for the same thing. Read all of it and take a general consensis. (once or twice daily read).


https://www.forexlive.com

Super amazing at helping you tune into sentiment. Analysis on all important things fx including commentary leading into a risk event and commentary afterwards.

Twitter
An amazing source for analyais. You can follow leading economists, professional traders, news providers, and politicians. Here is my list (always growing)






https://next.newsimpact.com/NewsWidget/Live
Data flash, an affordable.real-time economic release and squawk tool. Has nice features and mostly reliable.

https://tradingeconomics.com

Historical economic data. Used for general research.


https://www.livesquawk.com

A delayed news feed. Nice to use for catching up on sentiment. Forexlive is good for that too.




Then there is all the central bank websites.

Rbnz have turned dovish from neutral. I was asleep when it happened but look !t the opportunity it was. Pullbacks are a sell opportunity

Thanks EcoTrader for this wonderful thread. Am learning alot. How do you judge where the money is flowing from to where? and if sentiment keeps changing time to time, how do you manage such trades? Thank you once again, am following your thread closely.Please keep sharing

Hello Ecotrader, just some questions for you, hope you find some time to answer

1) Sentiment to your direction with use of economic indicators.....With the various info that keeps hitting the market to change sentiment, how are you able to cope up if you get mixed reactions from different analysts? I understand Central banks sometimes change their forecasts depending on the economic indicators, how are you able to judge sentiment to trade against their last statement? Do u have a greater picture of sentiment regardless of the news that keeps coming in? When do u decide to alter your direction(Wc economic news do u think can alter sentiment from the shortterm to long term?

2) How do you deal with positive and negative news that come out of economic data simultaneously that both diverge alot form the forecast/expectations on the same currency?

3) I understand bonds are risk off/longterm assets. How can a forex trader trading shortterm be able to use the bond market to help them to trade spot forex?
4) Do you use the bond market open times,libor fix time,gold auction times to influence your decissions? and if so why and how?
5) Do u think a trend in a high yield currency vs low yield currency ie AUDJPY is enough to determine sentiment and money flow? If not, why?
6)When you point out your direction to trade, do u use technicals ie S/R to pinpoint entry or you just enter and how do u place your stops
7) Do u use any kind of valuing/correlations in your trading to determine if instruments are underpriced or over priced ? If so, would love to know more on how you do this
8) Yesterday, i didnt see any UK news on the forexfactory calendar but you had a cable trade,how did you determine sentiment and what was your catalyst? Is it advisable to trade the pound now with brexit information breaking now and then?

Thanks once again..and great thread. Am following closely

I don't consider analyst reports as a trade signal. I prefer to aggregate reports to gain a general consensus amongst analysts and contrast that with my own analysis. If mine is diverging to theirs i go back and review my analysis and see if i have missed something. Central bank statements are fairly easy to compare. Most central banks use the last statement as the template for the new statement and change a few words\sentences. Their forecasts are supplementary to the statements and i don't trade the forecasts i trade the changes to the central banks statement and specifically changes in their language. Take the RBNZ last night - look at the wording changes since the last statement



For sentiment picture i use any major economic or political news from the previous session that will likely carry over, i look at the previous session stock market index closes to get an understanding of how risk sentiment faired in that session. In the current session i do pretty much the same thing but with current economic news and or political news. I don't care for economic releases that come out as expected. I only care for those that come out with a surprise and it happens daily.

There is an order importance across economic indicators. If they are similarly important and the picture is mixed with opposite diverging actuals versus forecasts, then i don't trade. If there is a clear difference in importance then i will focus on the important one and adjust my expectations so that it will likely offer a smaller opportunity. There are so many opportunities every week that missing some is not an issue. You can miss major trade opportunities and still earn a tidy profit at the end of the month.




By looking at yields and auction consumption. A strong auction implies a lot of cash flow into the safe haven and a weak one implies the opposite. Yields are opposite to price so if they are going up then money is exiting bonds and going elsewhere. Typically yields correlates to the underlying currency strength with demand for the currency increasing as bond yields increase. This relationship isn't very tight and can deviate so don't trade it outright you should correlate it with other analysis.


I sometimes use fix times for entries as they can produce short term price changes to influence the fix. Being aware of them is all you need to know for now as it is generally not a major element in my trading at least, only if i am about to open a trade leading into the fix time that i become additionally cautious and could back out of a trade or adjust the plan.



These days Ausie isn't a high yielding currency and is in fact below US rates. In times when the Au economy is without significant pressure then this pair is a good indicator of risk sentiment. These days however, the Au economy is struggling with the central bank being neutral, the housing market struggling and hitting consumer confidence, and not forgetting its close ties to the Chinese economy which has been struggling. You need to be aware of the deeper picture to appropriately assess the situation. I for one do not look at specific pairs to gauge sentiment i prefer to go to the source (the news) and understand what is actually happening. This way you do not get false signals and you will be much better prepared on what to avoid and what to focus on.



I don't use technicals at all to decide on a trade. Every trade decision is based on a fundamental deviation that needs to be priced in. I have started to use basic confluence zones as an entry point on days when there is no major news and instead i read sentiment. I place a hard stop which differs by trade but it is never used. I manage trades dynamically and get out long before a stop can be hit. This includes watching price action into confluence zones and time.



I do use correlations of markets but not to determine value. I use it as additional supporting evidence to support a sentiment and determine if an opportunity is available of unlikely. Take Oil as one example where its price has an affect on the Canadian $.



Sentiment analysis. Sometimes a catalyst can have a prolonged effect on sentiment. In this case the previous evening there was a Vote in the UK parliament that has significant implications on Brexit. There was no way in hell the market was not going to speculate and given this was essentially paving a path to providing a parliament consensus on what to do with Brexit, it was supporting of the pound.

I use the economic calendar specifically with releases that are a surprise to the market and news feeds to get a picture of sentiment (forexlive, twitter). I also use a currently strength matrix where it is compared against a basket of currencies and you can see the percentage moves against each to see what is happening with price overlaying with my view on sentiment

I wanted to discuss strategies around significant events involving shifts in central bank sentiment. These shifts offer multiple opportunities. You have the initial news release that generates impulsive moves like we had last night with the rbnz. You then multiple opportunities at later stages. Taking last nights rbnz as an example, today there was an opportunity get onboard some of the opportunity that will be priced in over the coming weeks. Price can do one of 2 things in the next trading session following a central bank shift. It can retrace then continue the move or it might have no retrace.

I generally approach this with a view that it can do either and I trade to suit both approaches. I will enter a trade at the extreme of the move at half the size I normally use and accept that there can be some drawdown. If there is no retrace then I am at least in the money. If there is a retrace I will enter another position on the retrace. The benefit of doing it this way is there is always going to be opportunity that will be taken. Then only circumstance in which price won't continue is major themes on a wider scale like risk off, a surprise change in central bank policy on the currency you are using to match with. These are rare but do happen so just be prepared to cut losses if they do.

Hi Eco Trader,



Very informative, subscribed, which thread I should follow, Trading News and Sentiments, or

With Technical Analysis, or both ?? plz advise. thanks,

This thread is pure fundamentals trading and the other thread is an offshoot of this that includes technicals which I am evaluating as an addition to my main strategy to add more value to the account. Follow both for a complete picture.

I don't normally front run a news release but in this situation it was a no brainer. There is no way tonights Brexit votes are going to produce a bad outcome. It can only be a good outcome given the circumstances. With this in mind I bought gbpjpy at 146.00 and currently have a break even stop in case the shit hits the fan. It is currently up around 40 pips.

And that's why you have a stop. Dup not supporting deal and in a blink of an eye 40 pips evaporate. Time for a guinness

This puts tonights vote into a more important event then it was a while ago. This means vote 3 is off the table

Complete rejection of 8 votes. My account again has 40 pips in it from shorting on the vote and this time its booked. Another guinness

Where the uk goes from here is anyone's guess. I was optimistic a majority can back behind something meaningful and different to the current deal but the idiots can't even agree on that. The only legal standing we have at this time is no deal brexit. It might have to come to elections.

It's a busy central banker speech day so will be keeping alert for anything market moving. In the am we have preliminary German inflation coming in. Normally this can drive sentiment however German Gov bonds have been struggling with yield and even dropped below japans which is significant. I won't be looking at the cpi today because of this unless it is very weak in which case there could be a sell opportunity.

Looking at sentiments and technicals, EUR is in a position to rally as its extended in oversold, hit good support and ranged. I will only look to buy it not sell it.
What eco conditions will make for buying it?

Nice thread making for a great read, btw.

Thanks Ecotrader for having the time to reply to me. Much appreciated..More happiness to you

Hey Princefred

We might get some relief rally in it today but that's about it as the inflation data has been coming in soft, general economic data has been weak to mixed, and the ECB recently pushed out any chances of rate hikes with a negative outlook on the economy. So you could trade the relief rally, if it materialises, but there might be better opportunities out there with diverging central banks. There is also a chance this $ sentiment will last for a while longer, look at gold softening still. There has been a slight up-tick in bond yields but the market is clearly still very much uncomfortable. It could be a choppy day or it could resume as it has been doing most of the week.

I might be done for the day personally unless the central bank speakers come in and say something unexpected. There just isn't any significant catalyst that could provide an opportunity. If you want to try take advantage of a relief rally then keep an eye on US bond yields.

USDCHF long more like it then since CHF is oversold in extension , ranged, hit key levels and good news for USD. As USD can take a reprive with/from JPY.

Is trading all about probability? Ask any trader this question and they will say yes. You enter a trade and wait for the market to move and as such it is probability. Focus your attention to the word wait and how you enter a trade and wait for the market to move. Having to wait for the market to move implies you are making an educated guess it will move. This illustrates a property of probability which is the time between a decision to make a trade and the eventual outcome of that trade. Gambling has very much the same property and the similarities are easily recognisable.

Now let's focus the attention to news trading and contrast it with this time gap between a decision and outcome, action reaction. That property is no longer present because the market, in the moment, is reacting to the news. With background research that puts the context of the news into a directional bias, and the market moving in agreement then the question is this still probability?

By removing the time element and having direction confirmation through background research, it is no longer probability. It is instead an event that the market is actively pricing in. So to conclude this note, trading doesn't need to be about probability.