Trading news and sentiment

30 pips booked on very bad German manufacturing PMI

@EcoTrader: so basically from what I understand is: my starting point should be what economic cycle a country is at the moment and what the Central Bank is doing at the moment, what they are thinking and what statements they issue in their scheduled and unscheduled events?

Also taking stock of the economic data they are focusing at present. At least this is how I understand.

What I understand is I'm supposed to construct the fundamental story though I actually think that I don't know how to look far back :d

Can you kindly provide an example of let's say using an event( or events) to establish a bias and then derive trading ideas. Thank you!

You don't need to focus a lot on the cycle just be aware of where we generally are which you can fairly quickly see from looking at interest rates over the last 5 years. The central bank is really where you need to spend all your focus on for a good background on the general direction. Start by getting to understand what they do, what the terminology means and how it is applied. This is necessary to digest their press releases and in those, you will get a good idea of what they are looking at as they mention the areas such as employment or inflation in either a positive or negative manner.

here is an example of the statement - you can gain more insight with the minutes which is longer and more detail into specific areas of concern but this is an aggregated view of their assessment. Not they are not concerned about employment but economic activity and inflation are major areas that have affected policy.



now look at the dot plots - see how they have projected fewer hikes this year and next



if you go to trading economics and take a look at the data you can overlap it with what they are saying and using the minutes you can get a much deeper understanding of the general outlook. Now once you have this (you need to do it with all central banks for the respective economies you want to trade), you can overlap that with market sentiment so let's take a look at that today.

First, we look at the previous equity session (Asia) to see how that market faired overnight. This is important as it sets context into the next sessions and could sour or boost risk sentiment.


As you can see it was muted but not negative so we don't have risk on or risk off so there is no carry-over sentiment we need to be aware of. Next, we look at the calendar and here you can see the euro is taking a hit with the bad data (was a trade opportunity as there was still some overflow of USD strength and no fresh sentiment driving news). So sentiment picture is starting to build for the day which currently included euro weakness. We also have Canadian data later that could add opportunities so we need to build our sentiment picture to understand what the opportunities might be and since its Canada, we also need to consider oil




now oil is softer so if the Canadian data is also soft then we have another weak counterpart to work with but so far no real strong counterparts except a weak USD. If oil picks up and the Canadian data is weak then you have a mixed picture and no trade opportunity. If oil picks up and the data is strong we have a strong counterpart to pair with euro but USD is also not exactly on the strong side so it is a second best. Looking at the news feed as stories progress you keep adding to the sentiment picture. here is a story for example that alleviates market uncertainty and drives risk on sentiment

Thank you sir. I have no questions as of now and will study your example. Please carry on with your usual business. Thanks again!

I underestimated the German Man PMI, i always thought it didn't have a big enough impact to be worth trading. Guess i was wrong.

it won't normally but look at the size of the deviation, that's where the reaction came from - it is a pretty big surprise to the market.

I will follow this 3 ways. Hopefully this will work

Canadian CPI beat but retail sales miss. I don't think the picture in the short term is as bad as it appears. There is no fresh US data to drive sentiment today, Euro stinks from this morning's major miss so all we really have to go on is a slight miss on sales (not something it would trade it is only 0.1 deviation). So out of the pigs on display if oil turns this Canadian pig will be the only one with lipstick and the euro pig full of mud. Watched sentiment battle to break the level price spiked to so sold eurcad.

it all hangs off oil

analysis

closed for 10 pips profit. Sentiment just not strong enough

I am done for the day - 60 pips bagged across 3 trades.

looks like sentiment finally pulled its finger out its arse. oh well, such is trading - would have been a 30 pip trade instead of 10.

cacadude is failed trader who think his robot will make her millionare in few months

but hes just pretender n will loss all her pennies

doesnt use fundamental in a market run by sentiment lol

UK vote last night is going to drive pound sentiment today i will be buying.

long gbpusd

If sentiment doesn't shift gear i will close this trade

Out for a small loss. What's going on with sentiment. Have the stupid algos caught on to a few no name mps who have said negative things this morning. The vote last night should be positive for the pound. Standing aside until these morons can figure their shit out

you just couldn't make it up could you. After the algo drama sentiment has kicked into gear. anyways i am back in - idiots.

Out +50

Somethings cooking

Spx500 and 10 year treasury diverging.