One of the most frequently asked questions in trading is that whether fundamental trading is better or technical analysis or technical trading. Which one is more reliable? Which one is more profitable? Which one is less riskier? We have some videos and articles about news trading because we had to explain how it works and how news traders use the news release time to take their
positions. For example:
- Non-Farm Employment Change and Its Impact on the Forex Market
- Forex News Trading: Employment and Unemployment News
- How to Trade Forex During the News Time
However, as you know our main focus is technical analysis and locating the trade setups on the charts. Now the question is which one is better and which one is more recommended for those who want to start trading. It was Jackson Hall Symposium on 27th Aug 2020. It is a yearly symposium by the head of FOMC and central bankers, finance ministers academics and financial market participants from around the world. It can strongly move the markets.
Now to answer the question that whether fundamental trading is better or technical trading, let’s take a look at the charts to see how Jackson Hall Symposium moved the prices, and then I will answer the question that whether you’d better to focus on fundamental trading, or if you follow the technical analysis the way that we do by following the longer time frames, not only your trading cannot be affected by news release, but also you can make even more profit.
Below is EUR/USD’s 15 minutes chart. I have switched to this time frame just to show you the price volatility during the symposium on 27th Aug 2020. As you see below, the market goes up and down like crazy at the middle of the day. The movement was about 140 pips. There is no doubt that no trader would be able to trade such a price movement, even if someone could enter long, using this time frame and through this volatility.
During the news release, spread goes dramatically up and brokers cannot handle the orders because so many orders are placed at the same time, and there are so many who want to buy and sell, and so brokers are not able to handle the orders on time and it is not really possible to enter the market with the price that you want and as soon as you click the buy or sell button, on your trading platform.
But, let’s assume that you could enter the market once you saw the price started going up (see the chart below). After you noticed the long trade setup on the 15min chart and you entered the market, the price would go up for about 50 pips which is good. But then it suddenly changed its direction and went down for over 140 pips. So your stop loss would be triggered.
Then, if you where brave enough to go short after forming a sell signal that formed by two candlesticks, the market would go down for about 50 pips again, but then it would go up and probably hit
your stop loss or you would be out at at breakeven. There is no doubt that you couldn’t trade this market during the symposium, if you were a news or fundamental Forex trader, or if you had traded the market, you would lose definitely, although there was a good volatility:
But let’s switch to the daily chart and see how it looks. On the daily chart, nothing as strange can be seen. Just the two days daily candlestick has long upper and lower shadows and is closed above Bollinger Middle Band.
Those who follow our videos know that it is a long time that we are waiting for this market and we have already announced that this market is moving sideways, and we are waiting for it to go up and break above the resistance or form a sell signal because this market is now dealing with a strong resistance line on the monthly chart, and as long as this market hasn’t broken above the resistance line, or hasn’t formed a sell signal below the resistance line, still we have to wait.
Therefore for us who follow the longer time frames like daily, the 27th August 2020’s Jackson Hall Symposium had no impact on our trading because we were already out and we were waiting for it to form a long trade setup:
Now let’s take a look at another important market which is gold. In my previous article, I explained that a long trade setup is already formed on the weekly and monthly time frames because gold has broken above a strong resistance level on these time frames. Then the next few candlesticks on the weekly time frame are retesting the broken resistance line, but so far the broken resistance line is working as a strong support, as you can see on the below chart:
If we refer to the 15-minute chart, we can see the same huge up and down movement and volatility that can easily hit the day-traders’ or news-traders’ stop-loss. However, on the weekly and monthly time frames, the long trade setup that we have already located remained completely intact during Jackson Hall Symposium on 27th Aug 2020 as you can see on the above chart.
Another important market is Amazon because we have been following Amazon as well and we have already talked about the long trade setup that formed on Amazon’s stock daily price chart: Amazon Stock Analysis
If you read my previous article, you will see that we have been following this market for such a long time, and we have been waiting for a long trade setup that formed a few days ago. But as you can see on the below chart, although Jackson Hall Symposium was extremely important for all markets and created a lot of volatility, Amazon on the daily chart also remained intact, and those who have already taken a long position are still holding their positions and nothing serious has happened to their positions and their money is not at risk:
With this explanation and examples that I showed you above, we have come to a great answer for the question that I asked at the beginning of this article. It doesn’t matter what kind of news release we have during the day. The trade setups that you have already located on the longer time frames (daily, weekly and monthly) are agreeable to whatever that the news is, and you won’t have to change your direction.
If the price moves strongly based on the news, it will be agreeable to the position that you have already taken based on the trade setups that you have found on these time frames.
Therefore, those who trade the markets through following the longer time frames and technical analysis won’t have to be worried about anything, even the strong news, and any trade setup that they locate on these time frames based on the technical analysis that we are following, which is based on candlestick signals and chart analysis and chart patterns is 100% agreeable to the news results and the decisions that the officials will take.
But those who focus on news trading, they have a higher chance to lose a lot of money. They even have a higher chance to wipe out their accounts in case their account is small and is leveraged.
So, we have made the traders’ lives so easy. They can easily forget about news trading and focus on chart analysis by following the longer time frames. If so, they will find strong trade setups without having to be worried about any news or any other things.
The trade setups that form under longer time frames are agreeable to the news or sometimes they are even ahead of the news. For example, I have seen this a lot that when a central bank is supposed to change the interest rate, a related buy or sell signal has already formed, since long time ago, on a longer time frame.
The conclusion is that if you follow our trading system, you will make your trading journey a lot easier and closer. You will reach your destination, which is becoming a consistently profitable trader much easier, if you follow our trading system on the longer time frames. So, I strongly recommend you to follow our videos and also our articles on this website.