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I've just listened to Brooks go on and on about how news doesn't drive the markets.
Was this bullshit statement made without any knowledge of how armed conflicts affect world markets?
Prices drive the news-News just follows price...Cheers
I have heard Al talk about how prices drive the market a few times. At 1st I wasn't quite sure why he was saying that. But now my understanding is that he means that Traders will buy and sell depending on how they feel about where price is sitting based on recent history and support and resistance, For example if we've got a second entry sell signal bouncing off major resistance level, after a climax top, and it is well above the moving average then many traders will be inclined to sell.
Another example: when the oil price is in a very strong bulltrend (sometimes because a geopolitical conflict has [or is expected to] reduced supply), traders will be less interested in sell signals, until the bulltrend becomes a trading range, and there is evidence (on the chart) that the trend is probably finished. Although experienced scalpers may take some sell signals, provided the timeframe they are trading is not in a strong bulltrend (even though a higher timeframe may be in a strong bulltrend).
So, if a trader just looks at the chart, they have almost all the evidence they need to make their trading decisions.
I think he also may have said longer term investors (not technical traders) are interested in fundamentals.
The problem with trying to trade off of news is that it isn't the news itself that matters but what the price does. So war breaks out which impacts supply/demand expectations of oil which impacts the price.
But you could get some pundits saying 'big impact on oil price' some others saying 'not as much impact as people think' etc etc. That's not tradeable it's just noise - which in my humble opinion we like to listen as we want certainty in the markets (good luck with that).
Just trade the price - who cares why it's going one way or the other (or worse, what people paid to entertain folk have to say about the future price).
News is always after-the-fact. Check out the news reports 3/20/2020..
Right before the NDX rallied 10,000 points. Just sayin.. Institutions sold millions
of puts and then bought futures til their eyes bugged out.
I dont think Al said news doesn't drive the markets - or put another way: Institutions are not waiting for so called "news" in order to create a trade plan for the next session. By the time the so called "news" is announced, the price is already baked into the news.
Take May 4th, 2022 FOMC as an example. Sure the "news" that day created volatility, but the next day, the Emini Bull climax was completely reversed. Was that news driven? Of course not. The climax and sell-off was a result of rational people & rational algo's making rational trade decisions based on the price of the market.
I dare say Al's point is - 'Who cares what the news is. Trade the chart in front of you.'
I agree 100% with this sentiment. The market has proven many times that good news and bad news can have the exact same affect on the markets. So if you trade news solely, you're probabilities are never better than 50%. And a 50/50 modifier doesn't add to your Price Action probabilities. I prefer PA technical analysis, which can give you 60%+ probabilities.
My humble opinion.
I have to agree with James Matthews. The reaction to the news, especially if it is a surprise, is the thing to watch.
