Price Action Vs. News – What should you be paying attention to?

Most new traders look to news or hedge funds upgrades/downgrades to guide their trading decisions. What they often don't realize is the news is usually late, as they are reporting on the facts after they have already occurred, and these hedge funds may be trading on a far different timeframe from their own.

So how do we distinguish from what is tradable and what is not? Price action!

As traders there is one thing you must learn to accept, the market is ALWAYS right! It doesn’t matter what the news says or what you think “should” happen, the market is factoring in thousands and thousands of variables that we haven’t even begun to think of. The market is a forecasting model therefore it is predictive in nature.

This means it often anticipates the results of events even before they occur, take COVID-19 for example, before we were all practicing self-quarantine the market was already heading down and pricing in the coming economic downturn. If you weren’t trading the price action then, you were probably wondering what was going on!

By the time the news was really reporting just how bad things were expected to be, the market was already nearing a bottom. Now as the market has rebounded significantly the news is shifting positive although another downturn is expected. If you trade the hype you will get burned...

In order to trade options successfully you need to learn to formulate a solid trade plan based on price action alone and learn to tune the rest out.

To better understand “What Moves Price” check out my free training series.