But...But...What about the news? Oil prices are skyrocketing, the dollar is the weakest it has been in recent memory, gold prices have hit record highs, food and commodities in general are skyrocketing, companies are missing earnings left and right and some even having negative profits, unemployment is no longer declining, I could go on and on and on about all the negative news lingering around the markets. But what about this news? Why isn't it having an effect on the markets?


It is. All these stories and millions of other news stories are having a DRAMATIC effect on the markets, but sometimes we don't directly see that effect in the form that the untrained eye would expect.


I think every single time I host a webinar or coach someone new to trading they ask me this common question "But what about the news?". Everyone seems to ignore or push off technical analysis and more specifically price action trading and is overly concerned about news stories that are featured in the morning paper or on the evening news. But they don't quite understand that by the time a news story hits the press, the market has already digested it and factored it into the current price action.

You see, markets update literally every millisecond. Different stories are bounced around, economic reports are factored in, company earnings are analyzed, and at the end of the day, unless you are the fastest reader in the world, you won't be able to gather news and analyze it before it is already factored into the market pricing.

For example, let's look at a HUGE story that hit the news--the Standard and Poor downgrade on the outlook of US debt. Some people were caught completely by surprise by this news event, however while I didn't know what the catalyst would be I know the markets were at a current high and I should start to prepare my short positions:

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This is just one of the millions of examples on how technical analysis can have us prepared before news stories even hit. Something we talk about in the price action trading course is how professionals emphasize and place trade around catalysts or news stories that are favorable to their technical analysis. That is, every single day thousands of news stories are out there with an equal magnitude, but for one reason or another only certain news stories make it on the evening news or in the morning paper. More often than not, these news stories go hand in hand with the current market sentiment and with what our technical analysis is telling us. Is this chance? I think not. But I don't have a clear explanation for it nor do I need one--All we need to know is to follow our analysis and let the news stories fall into place as needed.

So in short, if we learn how to properly read the price action of the markets, we'll never look at a news story again as long as we trade. I personally used to always read the Wall Street Journal every morning and tune into CNBC, but the day I stopped doing this and realized the market already factors all this news into the price action was the day I saw my results improve dramatically. There's no need to have a bias or try and predict what the news will make the market do, all we need to do is focus on the price action of whatever stock or currency pair we are watching and the rest will naturally fall into place.