Adapt Trading Plans To Counter News Events

When does the news present an opportunity to trade for profit… or force you to prepare to protect your account?

There is no precise answer to the question, yet traders can become adept at trading “despite” the news. This emphasizes the need to be prepared with all trades to counter news-driven cycles that could affect active positions.

Following are some insights for handling unexpected news:

• What happened? – Stay in tune with the overall market mentality and price direction. Expect fast drops from traders panicking and rallies that can take off with just a hint of trader “euphoria.” Don’t depend on the news, but stay aware of significant events that could affect your area in the market.
• Be Cautious – In this day and age, anything can happen (pandemic, UFOs) and send out an emotional burst that spikes volatility. Be wary not to get caught on the wrong side of a move – get out if needed. On the flip side, be cautiously aware of any opportunities that may arise when masses of traders have knee-jerk reactions to news.
• Check emotions at the door – Avoid trading solely off emotional news which may only be a short-lived setup lasting just a day or a few hours. This can be a very dangerous trap. Psychology is one of the most important factors in trading. Maintaining emotional control is important when following technical details and making objective decisions based on what the charts are showing.

For trading in an information-overloaded world, become adept at adapting and only trade what you are willing to lose. This creates a comfort level with less emotional influence that helps traders work setups strategically “despite” the news.