Read Between the Lines: Success in Trading - News Interpretation

Submitted by Marco on 14 April, 2006 - 12:38

Whether you are a day trader, or a forex trader... whatever - you may already watch the news and read the stock market news regularly. But what I found the hardest to do - the most challenging thing to do was to read between the lines. How you interpret the news is a vital element in successful trading. Sure, it isn't critical to your success if you already have a successful trading system. But it sure is a bonus if you can read the news and interpret it so that you can make a trading decision based on that interpretation. Experience as well as confidence plays a large part of this news interpretation - reading between the lines.

When you read and watch news reports about anything - if you are a serious trader - think about the bigger picture

So what has been in the news lately? Well recently I've posted up a direct suggestion about two weeks ago when petrol prices were at $1.10 that prices will go back up to $1.30. And it did. You didn't need to interpret that at all. Ok, think bigger picture. We had a news piece about Warren Buffet placing a strategy bet that the markets will not fall anytime soon. another piece about the fear of fund managers about the economy overheating. We had an IMF warning as well as an RBA warning about economies overheating. And another article about consumers taking out more loans... collectively what does that tell you? One person - dubbed the worlds greatest investor sells insurance - a financial instrument that acts like a put option reckons the markets aren't going to fall. Yet all these other financial and government institutions all warning of inevitable collapse? Watch your charts carefully. And more importantly, don't panic.