The absurd logic of the aprioristic analysis of news

[A.mengoza.alcfomex]

Hello everyone, As forex traders, we know how economic reports can shake the market. Normally the price reaction makes some sense, but when the market (like DOW or currencies)

[A.mengoza.alcfomex]

Here I leave the full text of the notes on finance.yahoo.com (which are changing throughout the day; luckily I had the previous version opened in the browser and I was able to compare them

[yaiza94]

Most analysts are lousy traders because they live trying to predict where the market is going. So I’m not surprised that they write that kind of crap on Yahoo Finance. If anything proves your analysis, it’s how essential it is to learn to think for yourself to become a decent trader.

[gani]

After the data I was reading all the headlines to understand how the market was going to react, because both the current data and the review were huge. It definitely took the market off guard, and among the headlines I read were: “The real estate market will weaken more” (Bloomberg

[A.mengoza.alcfomex]

The funniest thing is that when the market goes up for no reason, analysts say that "investors anticipate Fed measures." But when it goes down, then "the data was worse than expected." I mean, they always have an excuse ready to fit the story. The truth is that many times they don't understand what happens. They write because they have to fill in space and justify what already happened, not because they have foreseen anything. It's pure financial makeup.

[A.mengoza.alcfomex]

I find it incredible how the media changes the focus of the same data in a matter of hours, according to the direction of the market. It goes from “hope for encouragement” to “fear for recession” in less than two headlines. That shows that they don’t analyze the market, they simply follow it as sheep. Then they complain that people don’t trust the financial press.

[A.mengoza.alcfomex]

Sometimes I wonder if traders who operate on the basis of news really understand what they are doing, or if they are just chasing candles. How many times does a “bad” news end up making it go up? It’s that the market doesn’t react to the data, reacts to the expectation of the data, and then to the reaction of the other. It’s a game of reflexes rather than fundamentals.

[A.mengoza.alcfomex]

The irony is that the same analysts who fail every month in their predictions continue to have huge tribune and salaries. If a trader failed that often, it would be melted. But of course, they only write. They don’t risk a dollar. That’s why they can be calmly wrong without real consequences.

[A.mengoza.alcfomex]

What bothers me is not that they are wrong, because we all do. What bothers me is that they dissemulate it badly, as if the change of speech was something natural. A little honesty would not hurt them: "we don't know why it went up, period." It would be more credible than those forced analyses.

[A.mengoza.alcfomex]

Many new traders believe that reading news will understand the market. And they end up more confused than before. How not, if a news story has two opposite readings according to the portal you read? That’s why it’s better to study price action and stop relying on the “shift expert.” Your account will thank you.

[A.mengoza.alcfomex]

Instead of analyzing the complete data, they keep the number of the holder. -2.6% sounds bad, but if the review of the previous month is +3.7%, the net is positive. Is it so difficult to do the account? I don't say the market is logical, but at least let's try to see the numbers with context.

[A.mengoza.alcfomex]

What happened that day is a perfect example of media manipulation. First they inflate optimism with positive headlines, then when the big fish already sold, they throw panic. And the small investor gets trapped, confused and lost. History repeated a thousand times.

[A.mengoza.alcfomex]

I used to operate based on the news, until I realized that I was following smoke. Since I just look at the graph and key levels, I do better and sleep more calm. The information is important, yes, but misinterpreted is poison for a trader.

[A.mengoza.alcfomex]

What happens is that many people don't understand that the markets don't react to the news itself, but to how it compares to what is expected, and how it changes the odds of monetary policy. And all that in milliseconds. So trying to find logical meaning to each movement with Monday's diary is childish.

[A.mengoza.alcfomex]

The economic press should come with a warning: “reading at their own risk can lead to confusion.” Because honestly, there are analyses that seem to be written by inexperienced fellows. I understand that they have to publish something, but at least they do not disguise it in absolute truth.

[A.mengoza.alcfomex]

If analysts were as good as they say, they would be in an investment fund, not writing articles for Yahoo Finance. It’s that simple. The market moves out of fear and greed, not from what says an AP note. Never forget it.

[A.mengoza.alcfomex]

What’s funny is when they use phrases like “the market expected a fall, but this was even more pronounced.” What does that mean, exactly? How much is “expected”? Who expected it? Pure narrative to fill space. Nothing of real value for a trader they think.

[A.mengoza.alcfomex]

And the worst thing is that many brokers replicate these analyses on their platforms as if they were holy words. Then they don’t understand why their customers operate badly. What’s the use of so much technology if the content they offer is garbage?

[A.mengoza.alcfomex]

Thank you for taking the time to break up the numbers and show how a review can change the reading of a news story. That’s the kind of analysis that is worth reading. I wish more people would focus on understanding the data rather than following headlines like zombies.

[A.mengoza.alcfomex]

It’s tremendous how the media changes the discourse according to what the price does. First, “it comes up with expectations of encouragement,” then “it comes down to fears of the real estate sector.” Everything on the same day. It’s a shame for others to see how they contradict each other without even disguising it.

[A.mengoza.alcfomex]

I stopped reading headlines years ago. I operate my plan, I review the fundamentals on my own, and I don’t get carried away by the euphoria or panic of the covers. It’s amazing how much your operation improves when you get the external noise out of the middle.

[A.mengoza.alcfomex]

Do you want to understand the market? Don’t read the analyses after the data, I read the forecasts before. And compare. You’ll see how far almost everyone was. That teaches you to trust none. I did your own homework and you’ll survive.

[A.mengoza.alcfomex]

The fact that so many investors continue to operate based on “what the press says” is worrying. This business requires its own judgment. If you’re going to delegate your analysis to a rush editor, you’d better not go into business.

[A.mengoza.alcfomex]

The market is irrational by definition. To pretend that each candle has a “founded” explanation is not to understand how this works. And the media know it, but they still do because the narrative sells. Sad, but real.