【News moves and delays】The reason why people who trade based on economic indicators and headlines end up chasing price movements

The results of the employment statistics surpassed expectations. A prominent figure made a hawkish comment on rate hikes. News of geopolitical risks circulated.

When you saw such information, have you ever rushed to press the order button? Even though you understand the news content correctly, the moment you enter the trade, it moves in the opposite direction and you get stopped out. Or by the time you finally enter, the price movement has almost ended.

Those who seriously follow economic news are probably to taste this frustration many times. This time, we will think together why people who trade based on news or economic indicators tend to chase price moves and what to hold to break free from that pattern.

The market has already moved by the time you know the news

First, we should note that personal traders encounter news much later in the market process.

The results of indicators are processed mechanically as soon as they are released, and large funds move within those few seconds. By the time we open a news alert on our smartphone, read it, and decide that “this is positive for the yen’s depreciation” and place an order, the initial major price move has usually already passed.

What makes it even trickier is that the market often prices in results in advance. For example, good numbers can lead to a currency being sold instead.

“Why does it fall when the news is good?”

Many people have felt that. This is because expectations are already embedded in the price, and the profit-taking move can occur once the result is released. The direction of price movement and the quality of the news do not always align.

Why studying fundamentals increases hesitation

The more diligent you are, the more information you tend to look at—interest rates, employment, inflation, trade balance, central bank statements, and so on. Of course, knowledge itself isn’t wasted. However, using it as a basis for trading decisions tends to cause trouble.

That trouble is when the different materials contradict each other. Employment is strong, but inflation is calm. Interest rate differentials seem to widen, yet prominent figures speak cautiously. In such cases, which to weigh more often depends on the day's mood or the impression from the news you just saw.

The last item is particularly easy to overlook. If you always blame outside news for losses, you may lose sight of what you should fix in your own trading. News comes out every day, so there is no shortage of excuses.

Price moves right after an announcement tend to put individuals at a disadvantage

Right after an indicator is announced, the movements seem large enough to profit from. In reality, it is often an unfavorable scene for personal traders.

Spreads can widen temporarily, orders may not fill at the price you expected. It may jump up and then quickly reverse, taking only stops and then moving in the original direction. Watching such moves, some people wonder whether their method is bad or they themselves are.

What matters here is not to assume that your lack of success in that moment is due to your own capability. It may be that you were fighting in a fundamentally hard-to-read moment. Simply choosing a different place to trade can significantly change your trading landscape.

A mindset that focuses on patterns rather than information

What you need to avoid being swept up by news is not getting information faster, but rather moving the trigger for trading from information to pattern. Even if individuals compete with speed, they cannot catch up to counterparts with large funds.

Instead, how about shifting the trigger for trading from information to a pattern? Decide when to check the market, what conditions must be met to enter, where to take profit, and where to cut losses. If these are predetermined, there is no need to panic when news alerts arrive.

For example, when you know there is an important indicator scheduled in the morning, news-driven traders start predicting “which way will it move?” People with a pattern think, “I will just check at a set time whether my conditions are met.” Even with the same information, mental exhaustion is completely different.

This is not about ignoring news. After understanding the scheduled events, you should entrust the actual trading decision to the pattern. Treat information as a note of caution rather than a basis for decision. Once you can delegate this role, trading becomes fairly calm.

About the patterns you can receive through Investment Skill Share

Having read this far, you may understand turning to patterns as a base, but some of you may feel you don’t know how to create such a pattern. Creating it from scratch takes time and is easy to doubt.

Investment Skill Share provides all the patterns of a discretionary FX method that has been shaped over a long period—covering entry, take profit, and stop loss. You don’t need to stare at charts, and the style is to check only at certain times, making it easier to distance yourself from constantly checking news alerts on your phone.

Patterns are not easily learned by just knowing them. If you feel your emotions waver when news comes out, you can discuss that moment in the talk room and confirm the pattern-based viewpoint one by one. We provide a supportive environment so you can take your time and work at your own pace.