Trading news / fundamentals

I received an email from a reader asking me if I ever traded on fundamentals in the wheat market, or on significant news events. The answer is no, I don’t. In fact, I don’t even look at them.

My correspondent felt that it would be almost irresponsible not to be keeping up with the fundamental forces driving the market, and that good fundamental understanding is "bound to help improve performance". I have never found this to be true.

For example, here is the Pre-Opening Wheat Market Report from the CME for today’s session. Please read it and see if it would help you deduce (a) the likely direction of the market and (b) the best times to enter and exit a trade.

Personally, I don’t find it at all useful, although it might be helpful in explaining market moves after they have occurred. 

The truth is that there are professionals and industry insiders with genuine fundamental knowledge  which I will never be able to match. Fortunately, when these people take action in the market it is reflected in the price movement. They cannot act to profit from their knowledge without leaving "tracks", and it is our job to try and detect their tracks early enough to hitch a ride on  momentum shifts they trigger.

Today I was fortunate to catch a momentum move to the long side, which returned me 33.5 points with very little slippage. Time in the market was just over six and a half minutes.


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