Information Assimilation

I'll begin with a tale of my destruction to illustrate my problem.

I got killed today shorting USD/JPY, my pair of choice. I took a large position at 93.80 late last night. I thought it was ranging and if anything would resume it's decline barring any sort of intervention from the BOJ. If you look at the chart today, you can see that is clearly not the case.

The USD/JPY had a substantial rally today. The interpretation I'm reading at dailyfx.com (http://www.dailyfx.com/story/tophead...206285321.html) says that traders are jumping back on the dollar, considered a safe currency, because of very poor consumer confidence data released in the US today. Excuse me? I thought poor consumer confidence data would cause currency price to drop? Why did it react to the news by increasing in this particular instance? Isn't the JPY considered also a safehaven for risk averse traders? What is going on here? The bigger issue at hand is how to improve my skill and knowledge so I can better interpret market moves in the future.

There's so much information out there. What can I (and other traders) do to get only the most useful information and interpret it in the correct way? I'm open to any suggestions you may have. Any books you read? Websites you read? Any economic commentary you read on a regular basis? Am I think about this in the completely wrong way? Please discuss, critisize, etc...

Thanks.

Don't trade fundamentals, and sure as heck don't listen to analysts. They're all just randomly guessing, mostly after-the-fact "Oh it rallied because of [insert random reason here]." I could roll dice and get better results.

Not convinced?
Poor consumer confidence might weaken a currency, but what if other countries are worse off? Or what if the currency is already oversold? Or what if the fed raises rates? Or what if... or what if... or what if... there's a billion reasons why bad news might result in strength.

For some reason traders sold a lot of JPY and bought dollars. Why? Who knows. Who needs to know? Not like it really matters, classic hourly range breakout pattern made it easy to trade. Wait for b/o, wait for the pullback, take the trade.

No market responds better to TA than forex. If you want to trade fundamentals, stick with NYSE. But if you insist on Forex, fundamentals might only make 10% of your decision - look at what the chart is telling you.

I absolutely agree with this.

Fundamentals always have a touch of irony to them. It is as if news agencies have 4 pre-written articles. One is if a news release is positive and market goes up, another if it is positive and it goes down, yet another if it is negative and goes up and then finally if negative and goes down. With fundamentals there is always a hindsight explanation to everything, that is just how it is. I cant tell you how many Associated Press articles I have read where they say things like "Market plunges on recession fears." What does this mean? Recession fears have been ongoing for 10 months now in the U.S., yet (yesterday) recession fears specifically made the market go down? No, sorry. How about today, there are still recession fears today, perhaps even more than at this same time two weeks ago when the market was lower, but yet we are up? If you read the AP article yesterday you would wonder how this is, after all it is recession fear that caused the drop in the market ... it still exists.

As for today specifically, the market was "set" to go up today well before the Consumer Confidence report came out. 60% increases in volume on index funds isnt something that happens after news releases (unless it is actually a breaking thing like a terrorist attack or a natural disaster). This is something that was discussed yesterday, two days ago, last week.

Lets face it, we have no clue what is going on. I dont even bother with micro-news (including the NFP) and I am no worse off for it. After all, the worst NFPs in years have come out during the midst of this MIGHTY bull period for the dollar. I would think about the overall trend and try to think about how the big guys are trying to steal from the little guys. Then take a shot with a stop loss and see if you were right.

Not recently Cant tell you how many companies that are besting their own profit records and are trading below book value. Heck, some have more CASH than their entire market cap is worth. The key to the NYSE is picking a stock that wont go bankrupt, once that is done then it is about the same as anything else.

I took a big loss last night/this morning going short the usd/jpy. I had to place the stop way past the level my preferred style would dictate due to recent volatility. I want to be in and out relatively quick (up to 2 hours) The only thing I said to myself was "why didn't I wait to decide to enter or not after the candle closed"? I am angry with myself for taking a trade the way I did. I saw some selling come in and I shorted. I am trading 1000 lot (micro) and the 15 dollar loss got me almost as mad at myself as if it were the 1500 dollars that the standard lot would have been. I have a very long way to go.

good luck. I am a newbie but listen to these posters, you will drive yourself crazy trying to figure out why a certain move happened. I don't care why in the least, it's hard enough trying not to do something STUPID

Sounds like you got killed because you were risking too much of your account. Nothing is guaranteed in this world. How come you weren't prepared for the loss? Does the responsibility lie with USDJPY which 'didn't do what it was supposed to' or was it you who were placing more money than you were comfortable with on a theory that you do not really understand.

Fundamentals aren't bullshit, alot of the money that moves the market flows from one place to another for good reason. I agree the headlines are bullshit, so called analysts come out and offer causes to explain the markets, but most of these guys can't predict what is going to happen the next day with any degree of accuracy, much less trade any of this information. So if they can't make money why should we listen to them? The analysts and headline writers are there to sell newspapers, boost ratings etc. by appearing to be knowledgable, which is not necessarily always the case. Does this mean you should just ignore it altogether? Of course not, but you need to find some quality sources of information and still take it with a pinch of salt, bearing in mind that the market will do what it will do, and people may be making their trading decisions based on information and opinions that you had not considered.

Anyways, USD is appreciating in value, and has been for some time. Most likely this is due to money from riskier foreign investments in emerging economies being repatriated into USD, much the same as the explanation offered for the Yen appreciating in line with falling equity markets. Sometimes bad news can be good news. So, you have to ask the question - if USD and JPY are both appreciating and appear to be positively correlated, would it not make sense to match them up with currencies that are negatively correlated?

I recommend you take a look at

http://www.blackswantrading.com/

(thank you to whoever it was who initially posted the link to this)

and sign up for the free daily commentary to get a low down on what is going on from a fundamental and technical perspective.

For commodities info:

http://www.oilngold.com/

and get daily video updates and articles from

www.moneyshow.com

and

www.howestreet.com/audiovideo/

a lot of this is all just opinion, but you might pick up a thing or two.