Do you trade the news or the chart?

C

cashmoney69

I've been asking myself this for months, and cant seem to make up my mind.

I've done day trades, as well as swing trades and have been

profitable in both, but the one thing that is holding me back from

being consistently profitable is the fact that I dont know when to

trade the news or trade TA patterns.

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Here is what I've come up with on the advantages and

disadvantages of trading off news.

Advantages:

1. Millions of Americans and people abroad read the news, and make their trading / investing decisions based on what they read, because they dont have the time in researching the fundamentals, or the interest in learning about TA.

2. All this demand can kill even the best TA set-ups, pushing stocks to new highs/ lows.

Disadvantages:

1. Some times the people writing the articles know little or nothing about the stock or the company. By the time the article hits news stands, the move is over. In this case, TA would probably see a move coming before the news.

2. Some times the public does not bite the hook, and the news become meaningless. TA, again rains supreme.

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Advantages and disadvantages of how I think:

1. I watch CNBC, read the WSJ, read the news on MSN, Yahoo, Reuters, Bloomberg because I want know what everyone else knows

2. When I read/ watch the news on stocks and economic conditions, some times gap up's and gap down's come as no surprise, and I can get a feel for market direction for that day.

Disadvantages

1. I used to not trade based off news. I found it somewhat distracting and it often would disagree with TA.

2. I feel that if I dont read the news, I am being lazy, and will miss out on great opportunities.

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I'm so lost here!

- nathan
 
Quote from Cashmoney69,


I'm so lost here!


___________________________________________________

Let's see Cashmoney69, you're experiencing a learning curve & you're being tossed around like a rag doll by the markets.
So how do you address your problem? Be smart, hook up with a trader that knows his craft well & learn from him or will your pride
stubbornly say: I'd rather go down in flames than admit that I need help?

Asking questions & seeking clarification on Elite Trader is admirable, however, this can only accomplish so much.
We as traders have to pay our dues unfortunately, for some this can be costly, for others the learning curve is a snap.

So take that step, post on Elite Trader that you would like to hook up with someone near your city for example or go to this website: http://daytraders.meetup.com/, let's put an end to this slippery slope.
 
You gotta be selective with respect to news:

If the news is meaningful, eg, co beats EPS by 20c, or other sig. annoucement (litigation) and the stock has been beaten into submission, or vice versa, go with news and pattern..often times this approach leads to outsize gains; if the news is meaningless, or has been expected then tougher to guage, may be a nonevent (baked in the cake etc)

In the absense of news, just trade the technicals: bull/bear flags are especially reliabe

See SP last week.

Good luck
David
 
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