Plan Your Trade

How often do you read news to supplement how you trade? Does the trade ever work out the way it’s suppose to be? If it does what’s the percentage of your winning trade is contributed by what the news publish?

I have been cultivating selective ignorance for close to 2 years now. Haven’t picked up a newspaper or subscribe to any Trader’s journal ever since. Do you notice that whenever you trade based on a piece of news you are expecting something to happen and if it does not happen you get quite dejected? I believe the market has its own central brain where it actively consume every trader’s opinion about the market and only after digesting it will it make its move. No news or outside intervention would be of help at this point in time.

I remember 2 particular incident very vividly. First is the no short selling rule that was passed last year. There was a frenzy in the market with opinions that there is only one way where the market can move which is upwards. However after 2 days of it being passed the market still slides, it slides at a very ferocious speed. Mulling up traders that is not moving in sync with the market. Another would be infamous Bailout plan. Sentiments on the streets were that this is the mother of all Bailout and all the ingrain problems would be solved with the passing of the bill. The market was up close to 200 points as they were finalizing the verdict on the bailout. After the passing of the bailout another slide down happened, ending the day’s trade deep in the red.

What can we learn from these 2 instances. Does news help us in our trade? Does it gives us an edge? The answer is NO!

If that’s the case then what is news good for? Perhaps entertainment for people who has too much time on their hand. Try it starve yourself from news for a week and if you really need to just pass by the any news vendors to have a glance at the headlines. That is all you need actually. If a news is that important it would get to you by one way or another.

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