Fundamentals, technical analysis, and news

Forgive me for not being so ‘perky’ this morning but I am going through one of those ‘just when I thought I was starting to understand forex and feel good about my trades the goal posts move’ phases (I know I’m also tired because I’m too keen and sit in front of my workstation 25 hours a day watching my positions and leaving ridiculous messages on Babypips - although I do try and follow discussions and read whatever I can as it comes out).

I’m rambling.

My question is this:

I have been spending a lot of time just testing (or trying to backtest) certain systems and experiment with changing some of the indicators to best suit my style of trading - which is everybody’s recommendation on this site.

The reason that I am getting (or rather feeling) so frustrated this morning is because it just seems that no matter how good a system is - or for that matter - no matter how good your technical analysis - and no matter what your indicators are saying to you - the news seems to f**k everything up!

How do you cope with this especially in a week when there are just so many high impact announcements coming up? If you don’t want to trade the news - then are you just supposed to opt out until things stabilize? I can’t see how that’s possible given the fact that the economic calendars are just so full.

I mean - it just seems to me that no matter whether you are following the VanessaFX System to the letter or any one of the free (and I might add good and solid and proven systems like James’ which has been tried and tested and backtested ‘till the cows come home’ - I loved that statement although I see he removed it for some reason) they are all invalidated by the news it would seem.

What am I missing here?

And it is not only the news, it is also all the analysts on TV, and in the printed media.

I’ll give you some examples of what I am talking about (and what is frustrating me terribly):

  1. Everyone is talking about USD weakness and how bad things are for the USD etc. etc. and yet last night and this morning the USD is rallying against all the major currencies and the price of Gold has dropped. So where is this USD weakness everyone is talking about?

  2. You’d be hard pressed to find any commodities analyst that will tell you that the price of Gold is going down. They ALL (for once) concur that Gold will go to at least $700.00 USD an ounce very soon (one even said last Thurdsday that it would be at $700.00 USD by Friday night). From where I’m sitting it has come from around $692.00 USD per ounce to (currently) $688.00 USD per ounce (and has even hit a low of around $686.00 USD per ounce).

  3. At the moment it does not seem to matter whether the price of a pair hits any MA lines you’ve drawn or where MACD is pointing etc. etc. everything just seems to be going opposite to what I’m learning.

I could go on but I think you get the picture.

What is the deal with this?

Why am I just not getting to grips with this? I mean - I’m not a stupid person!

I mean - since climbing into this ‘like a bull in a china shop’ and losing all that money initially - I have taken a step back, tried to follow all the pointers on this and every other site that I can glean some knowledge from, but for some or the other reason nothing seems to be following what I am learning.

Just for the record - no - I have not lost any money - I have only made last week - and I am not holding on to ridiculous loss positions or anything like that - and I certainly don’t have any hedged positions open to protect against margin calls. I just want to know why it seems that just when I think I’m getting my head around this and building up some confidence in my trading and my thought pattern then the whole scenario (or market) seems to reposition itself and nullify or invalidate everything I’ve managed to get my head around in the past two months.

Addition / edit to above message:

Just for the record - I have Bloomberg and CNBC on all day in front of me - and this is just another example of what I am getting at.

Yesterday - there was a lower third (that’s what it is called in the video production business - man of many talents) i.e. the scrolling headline at the bottom of the screen is called a lower third. Anyway - I digress. The headline yesterday was saying something along the lines of ‘GBP set to fall as run up to 2.000 happened too quickly’. This morning the headline says 'GBP may rise because of higher inflation figures or interest or something like that (I couldn’t even be bothered at this stage to get the exact wording). WTFIWT? Does ANYONE actually know what is going on or are we (they) just taking a barely educated guess at what is going to happen next? I mean I realise that this is not an exact science but for crying out loud!

Every day I read the messages that arrive on the Analyst Arena and they’ll go something like 'Well - in our opinion - support for the EUR/USD is at (whatever) and strong support is at (whatever) and even stronger support is at (whatever) and distant support is at (whatever) and you definately cannot go wrong when we get to (whatever). Well I’ve tried to work out a strategy based on those forecasts on more than one occasion and invariably what happens is that the damn thing turns the other way or comes crashing through the distant support figure and would have taken all my supposedly ‘sure’ positions out in the twinkling of an eye had I actually opened positions based on those forecasts.

I mean - it is starting to look like your are far better off going against anything and everything that the analysts say at the moment. Is this possible?

And to make matters worse - I find myself sitting staring at my trading platform (and to be honest) too scared to enter a position no matter how ‘sure’ the indicators are i.e. even if the fifty thousand year chart, the millenium chart, the weekly chart, and the hourly chart were in agreement and MACD was crossing the signal line at a 90 degree angle after hitting a one hundred thousand year bottom, and somebody phoned me from Europe and told me that they are doing away with the Euro tomorrow at 09:00 GMT so get rid of it now - I would still hesitate - and I know that I am not going to get ahead financially if I’m not trading (how’s that for exaggeration)!!!

Please - I really want to master this - and refuse to give up - but it is turning my brain to mush!!!



You talk about working with and back-testing trading systems but express concern about the impact of news items on your performance. Keep in mind that back-tested trading systems included periods when news had an impact on prices. In other words, the news has already been factored in. As long as the back-testing includes sufficient data, the performance figures then you need not worry. Yes, you could get caught, but theorectially the system will more than make up for that.

There are only two ways to try to avoid news having an impact on your trading results. Obviously, one of those is to not have positions on during major data releases (note I said major - not all releases are impactful). The other is to trade in a long enough timeframe to be confident that the result of a single data release is unlikely to influence your position in a real fashion.

Good perspective, John.

Speaking of perspectives� Listening to too many experts may only confuse you further. �News� is only one factor in the overall trading scheme. Analysts are giving an �opinion� for your consideration. If your initial analysis is good and your trading method has a +ev, then the �news noise� should be not much more than a bump in the road.

Concentrate on mastering a few simple things at a time. It�s a long, long road.

Best of� � May your art work become a masterpiece.

(Hey, look! No arrows! )