This week alone, I have heard the Trade War between the US and China was both close and far from being completed. Or was that just the Phase One portion? Wait, Phase One? When did that become a thing?
I have been interviewed by two different media outlets a few weeks apart and each of them asked me about news from the state of the Trade War, but one asked how the market would be reacting to the positive news while the other was asking how it would react to the negative news.
As traders, did you notice that news about the state of the Trade War was pretty darn quiet during the strong run into Thanksgiving? Or did you hear some news and the market just didn’t care? I have said many times in my classes and webinars that the “effect” of news on the market is fascinating. Which came first, the chicken or the egg? Did the news actually move the market or are we just looking for a reason to explain a particular move in the market?
One of the ways I view it is that if we were to look at the market at some point in the past, would we really know that this move was because a particular economic number came out? Or that the president said this one thing? Or that some official from another country felt such a way about some topic? I highly doubt we would be able to line up the little news events with the particular move we want to examine.
Therefore, as traders, we trade the charts.
This isn’t to say that we can live in a vacuum chamber, some things are important to know about the state of affairs with politics, the economy, and news that actually do have a big impact. But by in large, news is chatter and is meant to distract and manipulate.
The saga of the Trade War should be a good lesson in that; so pay attention to how much back and forth there has been and if it all really mattered. Let your positions tell you what THEY want to tell you. Don’t let the mostly hunt-and-peck news of the day affect your overall trade plan and throw fear or greed onto your trend.
The charts will tell you what you need to know. After all, the price is always right.