News Trading - URgent question - please advise

hello everyone, a newbie question - news on the canadian retail sales came out at 13.30 (GMT) the result are as follows:

13:30 CA
CAD Retail Sales (MoM) (Feb) 1 0.5% 0.4% 0.9% Revised from 1.3%

13:30 CA
CAD Retail Sales ex Autos (MoM) (Feb) 1 0.6% 0.5% 0.5% Revised from 1.0%

my question is if the USD dollar is base currency and CAD is counter currency, then why did the price reacted bullish as oppose to bearish. i.e. it was positive news for the CAD not USD. please please clarify. again im sorry for the newbie question, but im trying work on news events with regards to FX trading.

And furthermore there were no other news events for USD or CAD at that moment in time.

please see attached chart illustration.

thank you in advance.

sami


I don’t really know either but, according to the economic calendar on fxstreet, only low volatility was expected for these two events, so perhaps the prices just kept on going on the current trend?

You have to understand one thing - NO ONE knows. And I mean NO one can tell you exactly. There can be only guesses.

People are still arguing if there is any logic in the market at all. The Random walk theory suggests that market prices evolve according to a random walk and thus cannot be predicted.

My best GUESS is the revisions from last month. Initial reaction for release was positive because of the ‘‘better than expected’’ data this month. Then traders saw the revised data and started buying at a lower price…

Martin Janson
Trade It Simple

You have to know a great axiom about forex market…

“It’s not the news but the reaction to them what matters most”

Think about it.

Good day. Here is a cool little trick to understanding the news. Almost 100% of the times in which news is released, the news has already been priced in… Look at AUD/USD for example. Yesterday when the news was released the price DROPPED like a rock. Yet, the traders with a bit more experience predicted the drop not because they anticipated good or bad news. Only because of the price action starting 24 hours before the news was released.


Then look at what happened once the news was released.


Really the purpose of “news” RELEASES is to QUICKLY reverse the overall trend… Especially that of the last 24 hours. If you begin to back test simply news events you will see exactly what it is I am referring to. Never enter a position based on the data. Enter the position based on the counter of the trend which we have.

Good day. Here is a cool little trick to understanding the news. Almost 100% of the times in which news is released, the news has already been priced in… Look at AUD/USD for example. Yesterday when the news was released the price DROPPED like a rock. Yet, the traders with a bit more experience predicted the drop not because they anticipated good or bad news. Only because of the price action starting 24 hours before the news was released.


Then look at what happened once the news was released.


Really the purpose of “news” RELEASES is to QUICKLY reverse the overall trend… Especially that of the last 24 hours. If you begin to back test simply news events you will see exactly what it is I am referring to. Never enter a position based on the data. Enter the position based on the counter of the trend which we have.

[QUOTE=“Milos;622905”]You have to know a great axiom about forex market… “It’s not the news but the reaction to them what matters most” Think about it.[/QUOTE]

Well said milos! I was long on aud/usd pair for a week now as I was expecting the pair to get stronger looks like it heading against my bet. News got released favoriting usd is getting stronger. But I had a conviction that aud was going to get stronger. Well now aud is trading at 0.92 compared to 0.95 last week. I’m left with little conviction now and don’t even know what I should do anymore. It’s a tough business. And I should take in I mean your suggestion that I can’t gain experience from trading off of weekly chart , now I see what you meant. Hats of to you ! I’ve got so much to learn. And just realized that should plan out my trades a week before I actually get to click the buy or sell button. I haven’t done my homework. Im a bit disappointed needless to say. Have a good day milos!! :smiley:

Firstly you gotta understand, this is a HFT controlled market. Mega orders will be activated at various price levels in response to any released news. This liquidity spark temporarily moves the market to one side before more huge orders are activated to the same or the opposite side.
As Milos said, it’s about the reaction

OP please have a look at EU EJ EC as of the current moment. Over the last 12 hours we have a seen an increase in the price with German news 1 hour before Mario’s speech. The very first move of the news should be to the down side resulting in a touch of the low of each respected currency during ASIA’s session. Where it will go overall is anyone’s guess, but because the price has moved up we should see a swift move down initially.

See what I mean…


Once the conference started look at the long red candle on EJ EU AND EC :slight_smile:

I love you guys, big thank you for your inputs and explanations. I’m going to look into this further and take it from there. i’ll do more research, if there are more questions i can come up with then i’ll post them here.

“It’s not the news but the reaction to them what matters most” Milos - true say

again big thank you for help and guidance.

sami :35:


This is a 1h chart of E/U less then 15 mins away from NFP. You can clearly see that as of right now we are in a downtrend (since the top ma line is red)… I would predict an overall move down, but the very first move (On the 1m chart would be a spike up towards the high which you see on your chart. Followed by a pullback which should give us a nice drop to the last support line! This is based on the premise of news reversing the 24 hour trend.


We only had a spike in the spread upward,but as predicted the overall move has been down. At this point a scalper takes his profit and moves on.

The thing about news is that some of the “big money” use it as an opportunity to fill their orders.

So for the USDCAD, news come out and you expect the USDCAD to fall. Suppose that you’re an institutional trader and you need a tonne of buy orders to be filled (from commercial customers etc). A mild news event may be a good time to fill some of those orders. News traders may sell to you and fill your longs until they’re exhausted. With no more sellers in the market, the USDCAD rises and you’ve satisfied your buy orders from your customers.

I am not sure about the message you are trying to convey. What I would like to add is that this is forex, not penny stocks. Liquidity isn’t an issue at all. The reality is banks don’t need to drop the price in order to fill pending buys, nor do they have to raise the price to get pending sells. If it was that simple then we would be able to see orders using level 3’s and be able to predict where the next wave would be. Yet, market depth isn’t something which can be used to our advantage, because the reality is we will never know where the next few billion dollars will come from. What does occur during NFP and major news events is that pending orders are pulled (it is evident by how quickly prices are knocked out within such a small amount of time) and how quickly the prices eat daily pivot levels only to bounce off of them.

I would contend that today for most was a dull day, when in reality it was a big time scalping party if you had enough capital and skill to know how to corner the market in such movements.

Yep, was going to post a load of stuff re Asian session and news, but it’s all out there already.

The important thing for someone following the news is to try to understand likely outcomes of the news itself and then learn the price reactions.

Who would really have been expecting a negative NFP after the release of this the day before?

ISM - ISM Report - April 2014 Manufacturing ISM� Report On Business�

And Pizza, yep, they call it ‘confidence’ on trading economics :slight_smile:

Fourth month in a row… outlook - positive.

We are on Learner Trader Island - so it’s possible to learn a little from here:

United States Purchasing Managers Index (PMI)

And since I’m talking about Pizza and his little gems, here’s another one.

The end of the month has passed, another month older, hmmm, and wiser maybe.

Note how USD/JPY and USD/CHF performed on April 30.

Thanks Pizza.

April month-end rebalancing may have little impact with heavy US calendar next week

100% correct. Market makers use news to move prices to fill orders. That simple!

If news had anything to do with trading we all would be billionaires.

Think of Bloomberg and CNBC as marketing for market makers. So if they need buyers they will make bad news look good and any good news over stated. If they need sellers it will be apocalypse hour everyday.

I think you should stick to the technical analysis and that what is on the charts. It is never that easy to predict the market movement after any release of a report.