Hello to everyone,
I’d like to hear from you guys on how would you ranking/scoring the impact of economic news? I know most sites already provide by letting you know the impact level of low, medium and high. But i find it not very clear to reinforce my fundamental analysis with only 3 level.
My trading style is swing and hence only high impact level news are kinda relevant to me. So, I went and record the pips movement manually for each type of news and pips movements for a few pairs of Majors.
my sample size is not very large as I started this year Feb until June (roughly 300 news), therefore might looks funny to senior traders here.
I rank it 10 to 1 by their pips caused movement after news is released. So by ranking those news I can reinforce my technical analysis by believing the trend is supportive by the fundamental.
Still, my data is highly prone to human input error and also questionable ways to categorizing the news too. Do you think the way I do is meaningless? or worse, steering me into even bad situation?
I still very new to the trading business. I wonder how anybody else is integrating fundamental analysis into their trading style?
I humbly wish you can share your ideas with me
Cheers~
Hey wow, nice work on these.
That’s a tough set of questions to answer. I think the problem with impact ratings or trying to tie those into your own strategy is that the event occurrence on its own doesn’t always give you a clear picture of its potential to move price up or down. I think it’s more how that one piece of data fits into the current sentiment at the time and whether the data misses or matches forecasts. And even then, many of the big events are often factored in by the market already ahead of release.
Now, if you have a handle on that, you also have to take into account the impact of an event, or how that event is received by the market as a whole. Only because the market reacted this way in the past, doesn’t mean that it will do it again.
Maybe look at sentiment analysis as well?
I do still think that your data does highlight that certain events, on average have a high confidence of moving price. So at minimum, you can prepare yourself for movement at or after the event data is released regardless of direction.
Great work. One of the best ways to understand what macroeconomic data will be most significant is to read each Central Banks Monetary Policy Statement. They will tell you exactly what they are closely looking at.
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Thanks a lot! I be sure go and have a serious look on sentiment analysis…I read it before, but it feels vague and hard to quantified so I kinda didn’t took it serious. After seeing your advice, I ought to try to understand it thoroughly…
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