Don’t stress about the news
In this weekly video:
00:21 – Decisions are based off the charts
01:05 – Look at the news announcements once a day
01:36 – The charts tell me all I need to know
01:52 – News is your opinion
02:48 – Should you straddle the news?
03:23 – Should I be watching the news channels on TV?
04:05 – H12 AUD/JPY Sell trade live on a webinar makes a +1.25% account gain
Hey Traders, Andrew Mitchem here, the owner of The Forex Trading Coach, video and podcast number 276.
Decisions are based off the charts
Now, as you know, I'm a technical trader, I look at the charts and I make my decisions based on what I see on the charts because as a technical trader, the price action tells me everything that I need to know. I'm not a news trader, I'm not a fundamental trader, and I know that when I mention that some people get upset, and there are certain people out there, and you know who you are, that say, “Hey Andrew, you can't be a trader purely technically.” But, I've been doing this for 15 years and yes I am, and so are my coaching clients.
So, I'm not saying that news trading doesn't work, so don't get worried if you're a news trader. But, I'm saying they don't need to stress about news trading because to me there's a better way, and that's technical trading.
Look at the news announcements once a day
Now, I look at Forex factory once a day purely for my own interest and knowledge about what news announcements are coming up, and what will the announcements of some of the major impact news yesterday, just purely for my own global knowledge of what's happening. But it does not effect my trading.
You see, as a technical trader I believe that I see everything I need to know on the charts. And as mentioned, I've been doing this 15 years and it's worked over that time pretty well. So, it's unlikely not to work in the future.
The charts tell me all I need to know
Because the charts tell me everything I need to know. They tell me where I see certain candle patterns that I'm looking for, they tell me whether we're in an overbought, oversold area. I can look at strength and weakness with other bigger timeframes, and then use that to my advantage on shorter timeframes.
News is your opinion
Whereas to me news is quite opinionated. You see, when a news release comes out, is that better or worse than the anticipated level? And then it's like, well, how much better or worse has it? And what some people see as good news, others would see as very average or poor news. And that becomes the problem as a technical trader looking at the other side of fundamentals. It becomes too opinionated.
You may say, “Well, that employment rate was really good.” I might go, “Well, it was okay, but it was nowhere near as good as expected or last months went down.” Those kind of things. And then how does that affect the currency? Whereas, as a technical trader the charts tell me everything. I don't need to still be worrying about whether this is good or bad news. It doesn't matter. The fact is that the price is either moving up or down, and that's really how I benefit as a technical trader.
Should you straddle the news?
And you get a lot of people who may say, “Look why don't I just straddle the news.” As in like take a buy stop, if the news moves the pair up and take a sell stop if the price moves down. Well that's okay, but that's basically just a technical way of trading a news item, because it's basically saying you've got no idea what's happening, it just means that if it moves up and breaks out upwards you're taking a buy trade and if it breaks that downwards you're taking the sell trade. Well that's not fundamental news trading. That's basically taking a punt each way. It's either going head up and get going or head down and keep going. And so that becomes the problem.
Should I be watching the news channels on TV?
You see, I had someone that contacted me, and the reason I'm making this video is they were saying, “Look, you know, do I need to be watching these news channels on TV? Do I need to be subscribing to news feeds or these type of things?” And I said, “Well, not saying don't do it, but in my opinion, you don't need to.” Because basically what you're doing is sort of consuming yourself and stressing yourself about all these conflicting news events, and basically like with most news, it's someone else's opinion and it's generally too late by the time most people get to see that information anyway.
So again, it comes back to what works and you know, for me, technical trading clearly works.
H12 AUD/JPY Sell trade live on a webinar makes a +1.25% account gain
Give you an example. It might be quite hard to see, but over my shoulder here, I took a trade on the 12 hour chart Australian dollar Japanese yen, yesterday, live on a Webinar with my clients. And I said the Aussie yen is stalling at around the 84/50 level. Go and have a look at your charts. We're currently today the eighth of June. So have a look at your charts sort of leading seventh and sixth of June and you'll see that 84/50 has been quite a high resistance level on the Aussie yen.
And I said to clients, “Look it's bounced here several times over the last few months and it's looking like it's about to drop.” And on the 12 hour chart we saw a great setup. I took it live on the chats with a half percent risk, both myself and my clients who took that same trade, which took us about two minutes to see and take, made a 1.25 percent gain on our account with half percent risk. It was a 2.5 to 1 reward to risk trade. Put it on, see the trade, put it on, wake up this morning, hit full profit. That's technical trading. That's why it works.