News Trading and Fundamental Analysis

Why we should not trade based on News.....

Read the following : Source from Internet...

Let’s look at an example to make this easier…

You are considering taking a perfectly good pin bar trade on the daily chart time frame that is in-line with the daily chart trend. The only thing giving you any hesitation is that a big economic news release that is scheduled to come out tomorrow. You sit there, stewing about, trying to decide if you should take the trade or not, over-thinking, over-analyzing because you’re reading everything you can about the expected impact of this news event. After much deliberation (and wasted time and mental energy) you decide to sit this trade out because everything you read says the market may move the opposite direction from the direction implied by the price action and technical analysis you’ve done.

Tomorrow comes, the trade is already working out as you expected before the news event is released. Then, the news comes out, BAM, the market is off to the races, screaming 150 pips in the direction you were going to trade, completely opposite to what everything you read said. You feel like someone just punched you in the gut, you feel angry, stupid and frustrated that you didn’t take that trade because you listened to all those outside opinions.

This is just one example of how news trading and fundamental analysis negatively affects trading performance. I have learned through my experience to avoid news like the plague.