Trading the News: You’re Doing It All Wrong…

Trading the News: You’re Doing It All Wrong… with David Moadel hey everybody and welcome to looking at
the markets with David Modell I wanted to talk about news based trading or news
based investing should you do it how do you do it do I do it well I do trade the
news but not in the same way that almost everybody else does I see people on
YouTube I see people in chat rooms and on social media talking about what’s
going to happen what’s going to happen in the news what’s going to happen with
this earnings report or this summit meeting or Fed meeting or whatever right
maybe a release of a product in Apple product you know are they going to sell
more of this or less of that so people have a tendency to want to trade
earnings and other events other news based events before the event they want
to make predictions but you know what happens to people who make predictions
yeah half the time they’re right half the time they’re wrong you might as well
go ahead and throw a dart at a dartboard if you’re going to do that and that
includes all the experts and pundits and talking heads on television out there
all the guys out there and I think you know who I’m talking about
who have all kinds of bells and whistles and things coming from the ceiling and
buttons that they like to push and and exciting graphics going on on the screen
on the TV screen that make it look like they’re really an expert but that just
means that they’re entertaining that doesn’t make them an expert at anything
it doesn’t make them any more accurate than throwing darts at a proverbial
dartboard so if you’re counting on something
happening in the future I recommend against that policy instead of
predictive I recommend that you be reactive I engage in reactive trading
not predictive trading I don’t try to predict anything people who are in the
business of having a crystal ball and predicting they don’t do too well they
may claim to do really well and they may they might try to sell you a bill of
goods claiming that they know the future so don’t get me wrong all investing in
all trading involves some measure of predicting if you buy something you’re
predicting that at some point in the future the price of that thing will go
up so that you can sell at a higher price if you’re shorting something
you’re predicting it’s going to go down so you can buy it back at a lower price
all right there is some predicting involved but I’m talking about trading
the news in terms of oh I think this is what’s going to happen if you clear
yourself of any responsibility to know what’s going to happen in the future if
you absolve yourself of that that burden of having to know what’s going to happen
in the future I think you’ll find a real sense of relief I think you’ll feel a
weight off your shoulders because now you don’t have to try to predict the
future anymore because you’re only human and you shouldn’t have to you shouldn’t
have to try to predict the future even the best machines and best minds out
there cannot do it what makes you think that you know you and I can do it I mean
come on so instead be reactive wait until your favorite companies your
favorite stocks or crypto currencies or commodities or whatever go down because
of some news event especially if it’s an overreaction if the market pushes it
down way more than it should have I believe that can be an opportunity
especially if it’s a great company or commodity cryptocurrency whatever that
didn’t deserve to go down at all or or maybe it just didn’t deserve to go down
as much as it did because you have over-reactive emotional traders and
investors and so eventually hopefully the price will come back up to where it
ought to have been you know if it shouldn’t have gone down that much in
the first place then perhaps the stock price or asset price whatever it is will
come back up when investors come to their senses realize it’s not the end of
the world for this company or whatever it is and that that they overreacted the
retail traders and investors the so-called
dumb money I know it sounds mean but that’s what they’re called they tend to
overreact they’re oftentimes the first to react and they get it wrong
they push it in the wrong direction the smart money the institutional
investors and the hedge funds and that kind of thing
what do they do well they’re not the first to react they’re the second or
third or fourth to react but they do react they react to the overreaction is
what they do and that’s what I try to do I try to move with the smart money that
doesn’t mean I copy the trades of institutional investors and hedge funds
although I might look at them for inspiration or just for ideas but I’m
gonna do my own research first and foremost and I’m gonna make my own
decisions and I want you to do the same thing make your own decisions based on
your own research and react to overreactions and you’re making a bet
and there’s always some risk but you’re making a bet that the market will
correct back when there was an overreaction after a news event and so
it’s up to you to use some common sense and a lot of research to decide whether
a big market move was the wrong one whether it was the retail dumb money
pushing something in the wrong direction based on sentiment or emotions and after
a while after you practice perhaps with a demo account or a virtual trading
account if you can practice that for a while first to see if you can get good
at it for for a long time you know for try that over weeks and months maybe
even years and you get good at it and then start committing small amounts of
real capital to it to this strategy only when you feel that you’re very
consistent at it so I hope this was helpful to give you some perspective of
trading the news yes you can do it but not in the way that most people do it
not in the way most of the pundits and analysts and article writers do it
I recommend recommend being reactive rather than predictive alright so if you
found this helpful feel free to give me a thumbs up on on this video if you
liked it alright and subscribe to my youtube channel right now if you haven’t
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know when I put out more videos like this okay and by the way I have a
seventeen video plus worksheets course available right now if you email me at
David Modell at I can give you a special price on that
and that is investing for beginners so if you or somebody you know as a
beginner at investing or you just want to know how to put together a trading or
investing plan my video course can walk you through that and also offer coaching
if you want more personalized coaching just email me at David Modell at thank you so much I really appreciate watching and listening I’ll
talk to you again soon yeah

7 thoughts on “Trading the News: You’re Doing It All Wrong…

  1. Hello Sir..I have one question..So when I do the technical analysis on Hourly or 15 minutes time frame..Is that okay to include pre market data..Because whenever I use daily time frame, After or Pre market data is not included in the daily So results on the Daily is different. Please help.
    Dear sir ..I am Aman. Your old student. I learned a lot from you and my mistakes. Thank you and Happy

  2. I agree. Some people are good at showing us how to make money and yet their account is only $10,000 or less. πŸ˜‚

  3. I liked your take on the matter and the honesty. I only trade earnings with companies that I have been following for at least a year. That actually helps me understand the working of the company and once I truly understand it, that makes seeing the company's predictions quite clearly. That means that if the company is overestimating earnings or production or revenue or whatever, I'd be able to tell whether that's true. Some companies like overestimating BEFORE earnings because they know they'd disappoint ON the earnings and that would crash the stocks. But if the stock was already up because of optimism BEFORE earnings, they're kinda leveling it out and that works out great for them as the stock suffers way less than it would if they hadn't overestimate. Overestimating ON PURPOSE is, however, illegal and they always deny it but once you get to know the company and the way they do insider business, it becomes pretty clear when they're overestimating and when they are UNDERestimatig (that happens too). And if you then go in on the trade in the opposite direction of the market, you often win ON the earnings. Of course, this strategy is not waterproof and it doesn't work with every company out there. I've had some nice returns by using it but I've also burnt myself a few times.

    Good video, brother.

  4. As usual David the calm delivery of your material is such a tonic. The reactive and over-reactive lesson is such an important factor, especially with any kind of financial situation. Oddly and on a slightly humourous note it has been a lesson I learnt quite a while ago, courtesy of my kids, I noted that when they wanted something they couldn't have from me , tantrums would ensue (over-reactive) if I was to engaged with them at that time things would spin out of control. It was far better to allow time to calm the situation then, for me to explain ( reactive) as to why I couldn't give what they wanted.. consequently it has been the approach, take to most things where a reaction is needed. Have a Happy and prosperous New year David

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