Hi guys,
I was going Long EURGBP today and made something like 30 pips. Weeeh! 
After i left the trade the price really dropped as you can see in the yellow circle.
Question:
Should i have been able to forsee that?
Maybe by some kind of mysterious pattern?
30 minute chart:
Greetings
NForex
Check it out on the daily chart. It made an attempt to break yesterdayās high and couldnāt.
It was economic news.
UK Prime Minister announced an election date caused GBP to fall which gave the Euro your 30 pip gain then more uncertainty about Greece today cause the EUR to fall causeing the fall after you exited
I see, where do you get your news from?
The babypips-site?
(ātoolsā)
Or is there some other place where i should maybe take a look at?
My advice is always keep your eye on this when trading.
Economic Calendar
and donāt take the news at face value, these calanders will give you the correct news but their forcasts of the impact of their news is often misleading, do your research, if you donāt know anything about the statistics and figures the news reports are about, look them up, go to wikipedia and other resources for more information and learn to understand the impact of the news, learn as much as you can about it, it will give you an insight into why the price movements happen.
An example of why you have to learn about the news figures and not take their forcasts at face value is in the NFP figures from Friday, they have it marked red as if it was bad news, the reason for this is as you can see on the calander the expected figure was 187k the actual figure was 167k, so that looks bad right ? Like the news didnt live up to expectations.
What they fail to mention is, non recession NFP figures should be in the range between 10k and 250k
If you look at the previous months figure it was negative 14k, so even though this months figure fell a little short of expectation it is still a jump from a negative, recession level value to a positive, way above recession level value, this is obviously very good economic news for the US and the price of the USD went up even though they have it marked in red on their calander as if it was a bad result.
Something not often mentioned on this forum is, the economic news is what drives the price, the study of it is known as fundimentals I say the fundimental reason the price moves is the news.
By using only technical analysis tools you are trying to predict the price movements based on past history and some of them will work on sudden price movements but at the end of the day technical analysis is like using second hand information, I prefer to go direct to the source and then use my technical analysis to confirm the price action is doing as I would expect, not the other way around.
You can still get it wrong though for instance I had done all my research on the recent price movements of the EUR/USD kept up with all the news and I had my strategy down, which was based on the fact that Friday through Monday Europe didnt trade because of their 4 day Easter weekend, while at the same time some very good US economic news was released, I was sure that when Europe came online at midnight last night they would react to the news they missed and buy the USD I opened 3 short positions yesterday evening 20 pips apart, watched the price fall slowly then falter at 1.3460, I then doubted myself, lost my nerve and exited all three positions before going to bed, only to wake up this morning and see they fell rapidly after I went to bed all the way down to my original TP level of 1.3392 and then further still. I should have had a 350+ pip trade instead I think I made barely 90
The pound fell, so the euro rose?
Those two arenāt negatively correlated that way.
NForex, in all honesty, I was a news chaser for a while. Watched everything, read everything.
All it did was make me paranoid about making a trade.
Now all I do is just see WHEN the announcements are coming out, and stay flat.
The charts now tell me all I need to know.
Itās a a bit liberating.
Agreed, if you trade daily charts, as I do, news is irrelevant. Eyeing up the daily chart painted all the picture one needs. A simple 1-2-3 pattern told the tale that this price was going south. As well, the line that was previously support was broken, tested for resistance, and failed. Now price is running towards the 161.8 fib extension, so price will probably stall around there for awhile as trades start taking their profits.
His chart was EUR/GBP so of course if the pound falls the Euro will rise. In other corrolations they may not affect each other that way but they do on their own directly corrolated exchange rate
Iām not saying anyone should choose either technical or fundimental, im saying you need both but the first hand source is obviously the economic news, the second hand source and confirmation, should be the charts and technical analysis, its like how many times do you see people who use only technical tools talk about and warn about āwatch out or the whipsaws will get youā as if they are an unforseeable act of god or something, when in fact usually they are caused by something announced on the news, therefore not unforseeable unless you ignore the fundimentals and opt to use only technical analysis and charts
I know exactly what youāre saying. I just disagree. Price action tells the story of how people reacted to the news. I donāt need to allow my own interpretation of the news to distort my perceptions of where price is going. I let price move, then react to that. I do not need to catch every single pip of a move. I simply need to catch just a portion of the move.
So if news comes out, price reacts, I follow suit.
I did not take this particular trade, however, my bias would have been short. News came out, price jumped up, however, still respected my own particular price action analysis by hitting the s/r line and bouncing back.
News for me is just the explanation of the movement after the fact. For me, price action always comes first.
Granted, I trade on a daily chart. I would be much more mindful of the news if I traded hourly charts and under. Not necessarily to predict movement, but rather not trade due to the uncertainty of the market after news has been released.
Well, for me I feel any news other than ones that can potentially fill front pages (Like the Greek debt crisis) are only good for several minutesā¦ Whatever happens after that somehow feels very technical-ish.
Soā¦I only look at fundamentals to avoid getting spiked in the wrong way and getting stopped out quickly and get a heart attack along with it.
This coming from a noob though.
EDIT: Just so to avoid accusations I am simply echoing mastergunner, let me say I only read his comment posted after I posted mine. I need to type faster lol.
And btw, I trade the 1h charts mainly.
I can see how you wouldnt be so interested in the news if you trade daily charts, I am more of a day trader on hourly and 30ās so the news can have, and often does have a big impact for me.
That doesnt mean I never get it wrong though because I do but what I have found is when I used to rely mostly on technical analysis I would exit orders at support lines and wonder why the price blew right through them or get whipsaws stop me out and wonder what caused it, then I started looking more at the news and discovered some of these sudden price movements can be predicted if you can get a good understanding of it and the economic factors involved.
You know, another thing about keeping an eye on the news events even if like mastergunner and medicalchew, you prefer your technical analysis and might not want to plan your trades around them, they can help in another way, if you see a trend in progress and would like an indication of how likely that trend is to continue, the current news on the currency pair you are looking at can give you a good pointer, for instance you were looking at a EUR/USD downtrend and the news came good about the EU and bad about the USD that would give a good indication that the downtrend would be likely to end pretty soon so in that scenario you might not want to enter any shorts until you see what pans out.
Edit: right now Iām looking at EUR/USD sitting at 1.3360 I have a small short at 1.3365 becuase Im anticipating the release of the minutes at 18:00GMT of the suprise meeting the fed had yesterday, which I believe is going to show they agreed to a hike in the discount rate, if they did it will show the Fed is in agreement that the outlook for the US economy is good so I am looking for a resumed fall in the EUR/USD, that combined with the renewed bad Greek news means Iām looking at the 1.3280 support level for TP which is about 80 pips away, Iām not 100% confindent about this because the meeting seemed to be as a result of the NFP results so even though the probability is high they would have agreed to raise the rate, it is not a certainty.
Also investors may have already anticipated that raise and already acted accordingly which would cause a lessened effect and in fact could cause a rise in EUR/USD if the fed didnt raise the rate and they all exit shorts because of that so I have a 0.1 position sitting at 5 pips profit right now, weāll see what happens at 18:00GMT
EDIT again: I forgot to mention the other reason I only entered 0.1 short is because these minutes to be released are supposed to be about a previous meeting in March so it may not even contain anything about the suprise meeting on Monday
Interesting conversation.
What i dont understand is:
When i looked at the news (at babypips) i could find an entry about GBP at 10:30. When the price dropped. Okay, i can understand that. It hist the S/R line and bounces back. I can clearly see it.
But where is the news which signaled the rise before?
I dont see them. Or better: Iām unable to find a connection between the rising PA and any news befor 10:30.
Can anyone explain?
At 08:30GMT the results of an EU investor confidence report were released the previous months figure was -7.5 the expected figure for this month was for it to be slightly better at -5.9 the actual figure was a lot better than expected at +2.5 so at just after 08:30 this morning you saw a rise in the EUR/GBP as a result
FOMC minutes didnt contain anything relevent to the suprise meeting on Monday closed out short at 1.3371
Ah, i see. Thank you!
People always try to find reasons for why the market does things it does when it goes against them. Sometimes there is no rhyme or reason. Itās good that you want to try to learn from the past, but sometimes there really isnāt anything to learn at all. Iām not saying in your case it wasnāt foreseeable, just that if you really want to interpret the charts one way, you can always find reasons to back it up (finding reasons to go long and short at the same time).
