Does news events affect price action analysis in trading ?

22 мар. 2021 г.

Hello everyone:

Today I want to discuss news events in trading. Often when a news event comes out in the market, we get some sort of volatility and we get a strong spike/impulse.
However, does news events affect our ways of understanding price action analysis ?


Let's take a look at a few examples of the recent FOMC volatility that happened in the forex, indices and commodity market.

Most of the market had a sharp quick move to one direction, hinting a sign of weakness in USD/JPY..etc.
However, all of them ended up with a reversal impulse, and recovered all the price from the volatility.

So, what can we take away from this ? News certain creates volatility, but not the overall price action trending direction.
We may get a temporary short term move, but eventually the market recovers it, and resumes its original direction.
Often beginner/newcomer traders will try to “jump” onto the news momentum, but usually end too late, and they will take a BE or losses.

We can not control the outcome of the news or whether the news will be positive or negative towards our trades, but what we can control is our entry, SL, TP, risk management, emotions and mindset.

Any questions, comments or feedback welcome to let me know :)

Thank you

Jojo