When trading the news, there are three questions that we need to ask ourselves before every trade: Is the news important? Is the surprise large enough? And is the surprise in line with the market’s sentiment?
1. Is the news important?
The first task at hand is to figure out what matters and what doesn’t. The top three pieces of potentially market-moving economic data for any country, which are the employment reports, retail sales, and manufacturing and service sector activity data, also known as the ISM or PMI reports. In addition to these, the Gross Domestic Product (GDP) releases and the inflation reports (consumer and producer prices) are also tradable. What is not tradable are reports like the Beige Book because there is no concrete number for comparison, data is released weekly, and any Japanese or Swiss economic reports are almost always overshadowed by the general sentiment in the market.… Read More