August 8, 2011
- in Uncategorized by schooloftrade
Ignore the News, trade the Reaction to News
To Use the News or Not to Use the News?
This morning we knew there was news @ 830am, so we know that we need to avoid trading from 825-835 and then use the market reaction to the news to make educated decisions.
I ‘traded the news’ by simply knowing when the news was coming out, and then looking at time & sales window and my charts to see the reaction to the news.
When I was a new trader, i assumed I had to learn how to trade the news!
What we REALLY need to do is learn to interpret the reaction to the news.
· Step 1 = news is coming out in 5 minutes, so sit on your hands.
· Step 2 = prepare your charts for whatever direction the market moves at the time when the news is released (moves up, down, or sideways)
· Step 3 = news is released and the markets will get whippy as they pile on trying to participate.
· We need to be patient and wait a few minutes or until the market finds a direction.
· Step 4 = trade with the new ‘bias’ after the news is released, now using your major levels of support and resistance that you found BEFORE the news came out.
IMPORTANT: Do not try and predict where price will go just b/c you think you read the news correctly. Wait for the market to react as a whole.
“wisdom of crowds” shows me the direction, and then I use my simple rules for entry.
Brokers:
Futures brokers have to work with the laws of the CFTC (leg of the SEC)
They have to have the min requirements by law here in the US.
They then can charge or require you to do anything above and beyond those.
Some brokers have lower fees and lower margins.
Example:
Our brokers use a $1500 margin on Crude and Gold
IB = $5000
Talk to Chuck = $5000
The larger broker companies that have lots of different products and more risky clients they need to protect themselves from unforeseen things in the future.
Day Trading Computer:
– Use the specs on the blog
– Anti-virus ESET NOD32
– Laptops are different, use this as your guide.
