So often I get this question: “Should you not trade when big news is coming out”? My answer is always the same. If you don’t know how to identify strong demand and supply in a market by looking at a price chart, don’t risk your hard-earned money in a trade and stay out of the market. However, if you do know what you’re doing, trading around news is great! Like any market, the global financial markets are nothing more than an ongoing supply and demand equation. Trading and investing opportunity is present when this simple and straight forward equation is out of balance.

Let’s now add news to this simple and straight forward equation… News creates perceptions and perceptions create action. In the markets, that leads to one of two things, a buy or a sell decision. So, understand that any and all influences on price are always reflected in price. If you are following me, you can then conclude that news, no matter how strong it is, simply speeds up the price action (movement) that was going to happen anyway based on supply and demand. Let’s look at a recent strong news event, the November 8th election, and watch how price moved in a market we cover on our Supply and Demand grid.

November 8th, 2016 – Election Day – Russel 2000 (TF) Futures – OTA Supply/Demand Grid

user guide

November 8th started with most people around the world assuming Hillary had an easy path to victory. As the day and evening went on, voting showed that it was a tight race and things were changing. Later in the evening, Trump’s predictions of a win were becoming more and more clear. Because of this “unexpected outcome”, the global equity index markets began to fall and fall hard, many people were selling. Our supply and demand grid told us this was going to happen as well. Price rallied to supply and then began to collapse as demand was far below.

November 8th, 2016 – Election Day – Russel 2000 (TF) Futures – OTA Supply/Demand Grid

user guide

Price declined all the way down to a key demand level we had on our supply and demand grid for the same market. This was also shortly after the election results became final. Price then rocketed off that demand and rallied to new highs as again, there was no supply to stop it. If you were just trading the markets key supply and demand levels November 8th and had no idea there was even an election going on, you would have taken these same trades. News, again, just sped up what was going to happen anyway. You can think back decades to all the major news events and look at your charts and you will see this is the case time and time again.

Our supply and demand grid didn’t know there was an election. It doesn’t care about Hillary or Trump. Our supply and demand grid doesn’t have a brain. It ONLY focuses on where the Banks and financial institutions are buying and selling, where the market’s significant supply and demand is. It doesn’t know news is happening, or care; that’s one of the reasons it performs so well. When risking your hard-earned capital in the markets, focus on what is real, not what you feel.

Hope this was helpful, have a great day.

Learn to Trade Now

This content is intended to provide educational information only. This information should not be construed as individual or customized legal, tax, financial or investment services. As each individual's situation is unique, a qualified professional should be consulted before making legal, tax, financial and investment decisions. The educational information provided in this article does not comprise any course or a part of any course that may be used as an educational credit for any certification purpose and will not prepare any User to be accredited for any licenses in any industry and will not prepare any User to get a job. Reproduced by permission from OTAcademy.com click here for Terms of Use: https://www.otacademy.com/about/terms

Education feed

Editors’ Picks

EUR/USD bounces after upbeat COVID-19 cure news

EUR/USD is trading above 1.13, rebounding from the lows. Gilead reported that its drug Remdesevir substantially reduces mortality among COVID-19 patients. The news boosted stocks and weighed on the dollar. US coronavirus statistics are due out.

EUR/USD News

GBP/USD recaptures 1.26 as the market mood improves

GBP/USD is trading above 1.26 as the market mood improves and the safe-haven dollar retreats. Investors are shrugging off Brexit concerns and focusing on hopes to cure coronavirus. US COVID-19 statistics are due out.

GBP/USD News

USD/JPY: No sign of a break out just yet

USD/JPY seems stuck in a sideways range. In historical terms, if there was this much uncertainty in the world the yen would be going through the roof.

USD/JPY News

Editors’ Picks

EUR/USD bounces after upbeat COVID-19 cure news

EUR/USD is trading above 1.13, rebounding from the lows. Gilead reported that its drug Remdesevir substantially reduces mortality among COVID-19 patients. The news boosted stocks and weighed on the dollar. US coronavirus statistics are due out.

EUR/USD News

GBP/USD recaptures 1.26 as the market mood improves

GBP/USD is trading above 1.26 as the market mood improves and the safe-haven dollar retreats. Investors are shrugging off Brexit concerns and focusing on hopes to cure coronavirus. US COVID-19 statistics are due out.

GBP/USD News

USD/JPY: No sign of a break out just yet

USD/JPY seems stuck in a sideways range. In historical terms, if there was this much uncertainty in the world the yen would be going through the roof.

USD/JPY News

Breaking: Gold breaks above $1,800, new mutli-year high, next levels eyed

Gold is trading above $1,800, highest since 2012, topping its previous high of $1,797 which now serves as support. The next levels to watch are $1,810 and $1,825. Further out, investors are eyeing $1,911 – the 2011 peak – and $2,000.

Read more

XAU/USD consolidates daily gains above $1,800

After advancing to its highest level since September of 2011 at $1,818 on Wednesday, the XAU/USD pair staged a correction and briefly dropped below $1,800 on Thursday.

Gold News

RECOMMENDED LESSONS

7 Ways to Avoid Forex Scams

The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?

What Are the 10 Fatal Mistakes Traders Make

Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.

Strategy

Money Management

Psychology