GBPJPY Forex: We closed our long positions as we swapped into a bearish tone on our Elliot Wave conclusion as correction took over.

We began with our 139.45 entry and added 138.00 area. We are looking for B (B3 on the chart) to extend up to 3 of the Elliot wave before adding further lots and taking away our Hedged A-B from 4 (A4 on the chart) with a targeted C at 2 (C2 on the chart).

Using Elliot wave on the Daily chart we track 1-2-3-4-5 points (points, not waves) and then apply A, B and C correction. A goes to 4, B to 3 and C to 2 giving us A4, B3 and C2 sequence and targets for taking profits both with and against the trend using a hedging matrix.

GBPUSD Elliot Wave

Putting it all together, from previous GBPUSD charts in our blog your see how we find entry and now how we exit.

Remember that there are waves within waves, the last GBPUSD action (March 2010) at the “bottom” for example is a 4-hourly Elliot 5 up to the correction which at the time of writing is at A4 of its correction. have a look on current 4- hour charts and see if you can find it, mark it up on a chart and track it.

Mastering Elliot will take you from a run of the mill trader into the world of super returns with clear trading plans and controlled compounding and positional management.

Hint: look for carry trade positions within the waves i.e. pairs that give you roll over fees in a given direction,  AUDUSD long was a very good option recently until its slight bear bias.

Exchange-traded funds (ETF)

An ETF is an investment vehicle on stock exchanges, they hold assets such as stocks or bonds and is valued approximately at the same price as the net asset value of its underlying assets. Most ETF’s are index tracking and are attractive because of their low cost, tax efficiency and stock like features.

Large institutional investors, authorised participants, actually buy or sells the shares of an ETF to/from the fund manager normally in large blocks for long term investment or more typically as market makers on the open market. Individual investors using retail brokers trade ETF shares on this secondary market.

The ETF offers public investors an interest in a pool of securities and other assets similar to mutual funds although the shares in an ETF can be bought or sold throughout the day like stocks on an exchange through a broker.

Investment uses

ETF’s provide diversification, low costs and tax efficiency of index funds while holding onto the features of ordinary shares. ETF’s can be utilities for long term investment or asset allocation and for frequent trading using market timing investment management.

Low costs are found due to the vehicle not having an actively managed element and because ETF’s are buffered from costs of having to buy and sell securities to accommodate purchases and redemptions of share holders.

Flexibility for buying and selling at current market prices any time of the day, unlike mutual funds and unit trusts, as a publicly traded security their shares can be purchased on margin and sold short enabling hedging, stop orders and limit orders.

Divesification, ETF’s inherently provide exposure across the entire index, industry sector, bond indexes or commodities.

Types of ETF

Index ETF: Attempts to track the index by holding in its portfolio either the contents of the index or a sample of securities in the index.

Commodity ETF (ETC Exchange Traded Commodities): Invest in commodities such as precious metals and futures. Commodity ETF’s are index funds tracking non-securities indexes.

ETC’s trade just like shares, are simple and efficient and provide exposure to an ever-increasing range of commodities and commodity indices, including energy, metals, softs and agriculture. However, it is important for an investor to realize that there are often other factors that affect the price of a commodity ETF that might not be immediately apparent; for example, buyers of an oil ETF such as USO might think that as long as oil goes up, they will profit roughly linearly. What isn’t clear to the non-professional investor is the method by which these funds gain exposure to their underlying commodities. In the case of many commodity funds, they simply roll so-called front-month futures contracts from month to month. This does give exposure to the commodity, but subjects the investor to risks involved in different prices along the term structure, such as a high cost to roll.

Bond ETF’s: Exchange-traded funds that invest in U.S. Government bonds are known as bond ETF’s. They thrive during economic recessions because investors pull their money out of the stock market and into U.S. Treasuries.

Exchange-traded grantor trusts: An exchange-traded grantor trust share represents a direct interest in a static basket of stocks selected from a particular industry.

Leveraged ETF’s: Leveraged exchange-traded funds (LETF’s), or simply leveraged ETF’s, are a special type of ETF that attempt to achieve returns that are more sensitive to market movements than non-leveraged ETF’s.

Tax efficiency

ETF’s in the United Kingdom are protected from capital gains tax by placing them in an individual savings account (ISA) or self-interest personal pension.

Trading

Perhaps the most important benefit of an ETF is the stock-like features offered. Since ETF’s trade on the market, investors can carry out the same types of trades that they can with a stock. For instance, investors can sell short, use a limit order, use a stop-loss order, buy on margin, and invest as much or as little money as they wish (there is no minimum investment requirement).

For example, an investor in a mutual fund can only purchase or sell at the end of the day at the mutual fund’s closing price. This makes stop-loss orders much less useful for mutual funds, and not all brokers even allow them. An ETF is continually priced throughout the day and therefore is not subject to this disadvantage, allowing the user to react to adverse or beneficial market condition on an intraday basis. This stock-like liquidity allows an investor to trade the ETF for cash throughout regular trading hours, and often after-hours on ECN’s (Electronic Communication Network). ETF liquidity varies according to trading volume and liquidity of the underlying securities, but very liquid ETF’s such as SPDR’s (Standard & Poor’s Depositary Receipts tracking the S&P 500) can be traded pre-market and after-hours with reasonably tight spreads. These characteristics can be important for investors concerned with liquidity risk.

Another advantage is that ETF’s, like closed-end funds, are immune from the market timing problems that have plagued open-end mutual funds. In these timing attacks, investors trade in and out of a mutual fund quickly, exploiting minor variances in price in order to profit at the expense of the long-term shareholders. With an ETF (or closed-end fund) such an operation is not possible—the underlying assets of the fund are not affected by its trading on the market.

Investors can profit from the difference in the share values of the underlying assets of the ETF and the trading price of the ETF’s shares. ETF shares will trade at a premium to net asset value when demand is high and at a discount to net asset value when demand is low. In effect, the ETF is providing a system for arbitraging value in the market. As the initial costs are one-off, the ETF vehicle offers some cost advantages over other forms of pooled investment vehicles.

Dow Theory, the father of technical analysis

The Dow-Jones is will sound familiar to anyone with a remotest interest in the financial markets. Charles Dow and Edward Jones founded Dow-Jones & Company in 1882; they published editorials in the Wall street journal in July 1884 outlining their basic ideas, which most technical traders will recognise. Dow Theory today forms the foundations of technical analysis despite new computer technology and supposed better technical indicators, Dow is the daddy of technical analysis.

Dow published the first ever market average based on closing prices of eleven stocks; nine railroad and two manufacturing companies, in 1884. Dow said that these eleven stocks gave a barometer for the economic health of the United States of America. In 1897 Dow furthered the indicator with two separate indices, he felt this would provide a better indicator, creating a 12 stock industrial index and a 20 stock rail index. By 1928 the industrial index had grown to include thirty stocks, today’s number. A utility index was included by the Wall street Journal in 1929.

Dow theorised over the averages he had produced, the Industrials and Railroad, nevertheless his analytical theory equally applies to all market averages.

Dow Theory, the basic tenets

The averages discount everything; the total and tendency of the transactions on the stock exchange relates to the sum of all Wall Streets knowledge of the past, present and future. Wall Street considers all and acts accordingly.

The market has three trends (two discussed); An up trend defined as a situation where by each successive rally high (peak) closes higher then the pervious rally high and that each successive rally low (trough) closes higher then the previous rally low.

A Down trend being the opposite, lower peaks and troughs define the down trend.

Dow also considered a trend to be made up of three parts, primary, secondary and minor. He used the ocean to describe these as Tide, Wave and Ripple.

The primary trend he equated to the Tide, the secondary the Waves that make the tide and finally the ripples on top of the waves or minor trends. A trader can therefore decide direction of the tide by noting the highest points of the wave on a beach by the next series of waves, if each successive wave reaches further up the beach then the tide can be stated as coming in. When the highest point of the wave recedes, the tide has turned and can be stated as going out.

Dow felt that the tide of the markets lasted more then a year and as long as several years. The secondary, the wave, represents corrections of the primary market and normally last three months to three weeks. These wave corrections generally retrace between one-third to two-thirds of the pervious trend the average being about half of the pervious trend.

Dow felt the minor, ripple, lasts less then three weeks, which represent fluctuations in the secondary trend, the wave.

The Major trend has three phases

Dow fixed his attention on our primary trend, which he states has three key phases:

The accumulation phase: Informed buying by the most astute traders, if the pervious trend was down, then this is the point at which astute traders realise the market has absorbed all the “bad news”.

The public participation phase: most trend followers begin to participate, occurring when prices begin to advance rapidly and business news improves.

The distribution phase: Economic news is better then ever, speculative volume increase and public participation increases. During this phase the same informed traders who accumulated near the bear market bottom begin to distribute before anyone else starts selling.

Those that have studied Elliot wave theory will identify this division of a trend, R.N. Elliot built upon on Rheas work in Dow theory, Dow really was the Father of technical analysis.

The averages must confirm each other

Dow stated that no important move signal could be correct unless it is confirmed by another reference. In Dow’s case he was referring to the Industrial and Rail Averages he devised. He felt that both the Industrial and Rail averages must signal the same indication to be confirmation of the move. He also felt that the signal did not have to be simultaneous, but recognised that the shorter the period of time between both signals the more powerful an indicator. Conversely if the two signals diverged the assumption is that the prior trend was still maintained.

Volume must confirm the trend

Simple, volume should expand or increase in the direction of the trend. Savvy traders would use volume to confirm their primary forecast of price action.

A trend continues until it gives definite signals of reversal

Mentioned earlier relating to Newton’s law of motion; an object in motion tends to continue in motion until some external force cause it to change direction, in our case it’s a trend.

A Technicians most difficult task is to distinguish between a normal correctional movement and a new leg of a new trend. Utilising Dow’s initial definition of a trend we now have two scenarios in which a market can change direction by breaking the trend definition.

Closing prices only please

Dow theory uses exclusively closing prices, as Dow believed that the price had to close higher than a previous peak or lower then a previous trough to be valid. Dow’s theory assumes intra-day penetrations as invalid.

The third trend

Ranging, sideways, lines in the average, rectangles are all terms referring to the third trend of Dow’s theory. These sideways trends are normally corrective in nature often called consolidations.

Application: Dow theory on futures markets

Dow worked with Stocks on the major trend where buy and hold is a valid trading strategy. Futures present the trader with the added problems of high leverage and this brings the intermediate, the most followed and the minor trend.

Scaling down Dow to fit the futures market must be made. Dow assumed that most stock traders/Investors would use the intermediate correction phase for timing purposes to enter the major trend. With futures we scale down the process and pay attention to the minor trend for timing purposes.

If a trader expected a intermediate trend to last for a few months we would then look at near term dips in the market for our timing purpose-

Dow theory conclusion

If you applied Dow theory to recorded data over the last one hundred plus years you would have captured 67% to 75% of all market moves on the Industrial averages and the Standard and Poor 500 (Barons). Although Dow theory misses up to 25% to produce a signal and normally enters in the second stage of a trend, around the same time as most modern trend-following technical systems, it must be remembered that Dow did not intend to forecast trends. Dow sought to be aware of the emergence of a Bull or Bear market and capture the large central section of the important move, not bad for an old man.

Many of you will know I’m predominately a technical analyst when on the Forex markets; I will use technicals as my prime analytical device of forecasting, particularly as my timing tool. Add a dessert spoon of fundamental analysis for confirmation (I do my fundamentals mainly on the USA economy when on Forex for obvious reasons) on the larger scene and I’m all set for a day’s trading.

What I don’t talk about often is sentiment analysis, a strong player on the near-term or day trading game. In my usual style I will define sentimental analysis, how we analyze it and how to use it in rational order.

Sentiment analysis, what is it?

Sentiment analysis is a broad area of processing communication channels, text, audio, visual or digital.  In simple terms we are attempting to gauge the attitude of the speaker or writer and their emotional state, or more importantly the emotional state they wish to communicate to their audience, you.

Also, if you are like me cynical, you would assume that whoever is talking / writing also has a motive that may not be in line with the emotional state they wish to produce from the simple marketer who has to write something to push you towards a product (look for masses of twitters and free this and that), a Bloomberg presenter who is paid to talk (a lot) to a release from a company with an invested interest in the markets or their own share price to finally the governmental speaker that maybe voted out of the next election unless his comments are popular. All I’m asking you to do is think about it.

Sentiment analysis, doing it

Analyzing sentiment can be a science or art, computers using “bag of words” software to provide semantic orientation or appraisal theory assessing the variances of emotional reactions to a given statement or event.  You can use statistical, count positive, negative of statements and then tally your results, or linguistics that produces rules and compares the statement to them.

Whatever method you use the goal remains the same, we are attempting to gauge the polarity of the text, sentence or feature and if it is positive, negative or neutral to the market combatants and project this into our forecast and timing analysis as an added confirmation.

Sentimental analysis, using it

Using sentiment, after my initial technical analysis of the near-term (the last move: daily charts) I’m looking for turning points and apply my money management strategy, from there as a cautious trader I overview my fundamentals and look to trade the same way of the last known fundamentals (also looking for early turns in technical’s for unknown fundamentals too, that’s another story) , as sentiment statements enter the data stream I begin counting positives and negatives and scan the feed for key phases or sentences along with who’s saying it and I think about why they are saying it. All fall into line and trading operations begin, if something is off set I do what a good trader is paid to do, wait, re-analyize, check and double check.

The old saying “There ain’t no such thing as a free lunch” is an important quote to remember, humans by nature have their own goals, amplified by the fact you are in the market with some of the most capitalist, competitive, skilled and cunning people on the planet who will and do everything possible to make money, their communication with you is important and you should take note.

Take care in the information you receive, analyze it: who, why, when, positive, negative, effect

The British Pound is going up on Monday, join my free online dating website here >>>

Rob Lee

Senior Analyst Arriba Capital off-shore

Consultant Analyst and Investment management school London

The alpha coefficient (α_i) is a parameter in the capital asset pricing model (CAPM). It is the intercept of the Security Characteristic Line (SCL). Alternatively, it is also the coefficient of the constant in a market model regression.

It can be shown that in an efficient market, the expected value of the alpha coefficient is zero. Therefore the alpha coefficient indicates how an investment has performed after accounting for the risk it involved:

• α_i < 0: the investment has earned too little for its risk (or, was too risky for the return)
• α_i = 0: the investment has earned a return adequate for the risk taken
• α_i > 0: the investment has a return in excess of the reward for the assumed risk

For instance, although a return of 20% may appear good, the investment can still have a negative alpha if it’s involved in an excessively risky position.

Besides an investment manager simply making more money than a passive strategy, there is another issue: Although the strategy of investing in every stock appeared to perform better than 75 percent of investment managers, the price of the stock market as a whole fluctuates up and down, and could be on a downward decline for many years before returning to its previous price.

The passive strategy appeared to generate the market-beating return over periods of 10 years or more. This strategy may be risky for those who feel they might need to withdraw their money before a 10-year holding period, for example. Thus investment managers who employ a strategy which is less likely to lose money in a particular year are often chosen by those investors who feel that they might need to withdraw their money sooner.

The measure of the correlated volatility of an investment (or an investment manager’s track record) relative to the entire market is called beta. Note the “correlated” modifier: an investment can be twice as volatile as the total market, but if its correlation with the market is only 0.5, its beta to the market will be 1.

Investors can use both alpha and beta to judge a manager’s performance. If the manager has had a high alpha, but also a high beta, investors might not find that acceptable, because of the chance they might have to withdraw their money when the investment is doing poorly.

These concepts not only apply to investment managers, but to any kind of investment.

A coefficient measuring a stock’s relative volatility to a market index, such as the S&P 500 Index. A manager with a Beta greater than 1.0 is more volatile than the market, while a manager with a Beta less than 1.0 is less volatile than the market.

“An important measure of a stock’s (or a portfolio’s) volatility in relation to the Standard & Poor’s 500, which by definition has a beta of 1.0. A beta higher than this implies greater volatility than the overall market. Thus, a stock with a beta of 1.5 will move up 15 percent when the market rises 10 percent. In good times, high betas imply high returns, since a beta above 1.0 amplifies the market’s movements. In bad times, of course, a beta below 1.0 is desirable, since you wouldn’t want your portfolio to magnify downward movements. Ideally, you want a low beta and high returns, which is hard to get. You can lower the overall beta of your portfolio by adding lower beta stocks to the mix, in effect diversifying away some of the volatility.”

Investment managment education with AIMS London Hertfordshire Bedfordshire

Basic Order Types

There are some basic order types that all brokers provide and some others that sound weird. The basic ones are:

• Market order
  A market order is an order to buy or sell at the current market price. For example, EUR/USD is currently trading at 1.2140. If you wanted to buy at this exact price, you would click buy and your trading platform would instantly execute a buy order at that exact price. If you ever shop on Amazon.com, it’s (kinda) like using their 1-Click ordering. You like the current price, you click once and it’s yours! The only difference is you are buying or selling one currency against another currency instead of buying Britney Spears CDs.
• Limit order
  A limit order is an order placed to buy or sell at a certain price. The order essentially contains two variables, price and duration. For example, EUR/USD is currently trading at 1.2050. You want to go long if the price reaches 1.2070. You can either sit in front of your monitor and wait for it to hit 1.2070 (at which point you would click a buy market order), or you can set a buy limit order at 1.2070 (then you could walk away from your computer to attend your ballroom dancing class). If the price goes up to 1.2070, your trading platform will automatically execute a buy order at that exact price. You specify the price at which you wish to buy/sell a certain currency pair and also specify how long you want the order to remain active (GTC or GFD).
• Stop-loss order
  A stop-loss order is a limit order linked to an open trade for the purpose of preventing additional losses if price goes against you. A stop-loss order remains in effect until the position is liquidated or you cancel the stop-loss order. For example, you went long (buy) EUR/USD at 1.2230. To limit your maximum loss, you set a stop-loss order at 1.2200. This means if you were dead wrong and EUR/USD drops to 1.2200 instead of moving up, your trading platform would automatically execute a sell order at 1.2200 and close out your position for a 30 pip loss (eww!). Stop-losses are extremely useful if you don’t want to sit in front of your monitor all day worried that you will lose all your money. You can simply set a stop-loss order on any open positions so you won’t miss your basket weaving class.

• GTC (Good ‘til canceled)
  A GTC order remains active in the market until you decide to cancel it. Your broker will not cancel the order at any time. Therefore it’s your responsibility to remember that you have the order scheduled.
• GFD (Good for the day)
  A GFD order remains active in the market until the end of the trading day. Because foreign exchange is a 24-hour market, this usually means 5pm EST since that that’s U.S. markets close, but I’d recommend you double check with your broker.
• OCO (Order cancels other)
  An OCO order is a mixture of two limit and/or stop-loss orders. Two orders with price and duration variables are placed above and below the current price. When one of the orders is executed the other order is canceled. Example: The price of EUR/USD is 1.2040. You want to either buy at 1.2095 over the resistance level in anticipation of a breakout or initiate a selling position if the price falls below 1.1985. The understanding is that if 1.2095 is reached, you will buy order will be triggered and the 1.1985 sell order will be automatically canceled.

Always check with your broker for specific order information and to see if any rollover fees will be applied if a position is held longer than one day. Keeping your ordering rules simple is the best strategy.

To study technical analysis we need to define what it is and separate it from other methods used, such as fundamental analysis, to determine market movements and direction.

Technical analysis is the study of market action using primary charts to forecast the future price of a given market or security. Market action is a term that includes the three principal sources of information used by a technician:

1. Price
2. Volume
3. Open interest

Price action is a term that is not to be confused with market action, price action refers solely to the open, high, low and close (OHLC) prices of a given period of time for a given market or security.

As technicians our philosophy states that:

1. Market action discounts everything
2. Price moves in trends
3. History is repetitive

Market action discounts everything

Market Action, the foundation of our study of the markets, which is primary to understanding our analysis, is that everything that can affect price fundamentally, political, psychological, geographical, acts of god or otherwise is built into the price of that market.

A technical analyst is stating that by studying the market action of a security they are actually studying the shift in supply and demand, if demand exceeds supply the price will raise and conversely if supply exceeds demand the price will fall, the basis for all economic and fundamental analytical work.

A technician reverses the conclusion by stating that if market action is rising then the fundamentals must be that demand is exceeding supply and that if the market action is falling then that fundamentally the supply is out striping demand and must be bearish.

A technical analyst then can state that all that needs to be studied is Market action, to forecast the future direction of a market. A technician is not overly concerned with the “why” a price rises or falls, but more “when” a price turns at a critical point often when no one really knows why in the early stages of a price trend.

The logic is that the market discounts everything, everything that affects price is already reflected in the market from grass roots up. By studying the market action the wealth of knowledge in the Market is telling the technician which way is the likely future direction.  There are reasons why the market moves up or down, but as technicians do not feel that knowing the reasons are necessary to forecast direction, not why but when.

Price moves in trends

The concept a technician understands is that price moves in trends. A technical analyst has to believe price moves in trends to make his predictions. This theory is key to identifying the crucial stages of a price trend change, the optimal point at which to trade in the direction of a trend. An out come of this is bastardised from Newton’s first law of motion, a trend is more likely to continue then reverse.

Simplified, a trend will continue until it reverses, therefore a technician will ride a trend until it shows signs of reversal, the basis of our work as technical analysts / traders.

History is repetitive

Technical analysis is the study of market action, which is effectively the study of human psychology. Patterns emerge in a chart for that very reason as human psychology, which tends not to change, repeats its self. The study of the past will give us insights of the future.

Technical vs. fundamental

Fundamentalists concentrate on the laws of supply and demand, which moves price up or down. All the relevent factors are dialled into their analysis to produce an intrinsic value, what it is worth. If the value is under priced then it must be bought, likewise if intrinsic value is over price, or overbought, then a selling order would be correct.

Both technical and fundamental analysis is attempting to answer the same question, the direction of price albeit with different tools. Fundamental analysis looks at the cause while the technician looks at the effect. A technician believes the effect is all that is required to reach a conclusion, whilst the fundamentalist always has to know why.

In real terms there is a lot of overlap, fundamentalists for example use basic technical analysis and the technician will have at least a rudimentary awareness of the fundamentals, economic news for example. A problem arises, often at the beginning of a critical move in the markets the fundamentals do not correlate with the actual market conditions. This presents a conflict as technical analysts contradict fundamental analysis.

The only conclusion we can reach is that the market trend tends to lead the fundamentals, in other words market action is a lead indicator for the known fundamentals. Unknown fundamentals are working of which the market has yet to discount from price, often major moves in the market begin with little or no change in the known fundamentals and the move is well underway before the fundamentals come into the conscious knowledge of the market masses.

As a technician we become at ease in positions where conventional wisdom disagrees, we just don’t need or are unwilling to wait for fundamental confirmation.

Timing

Leverage demands excellent timing, futures markets for example with high leverage requires accurate timing of execution as we take on positions with low margin requirements.  A small move in price can realise profits or more importantly force a trader out of the market and produce a loss. Unlike stocks where we can buy and hold, we can be, as a futures trader, the correct side of the market and still lose as timing becomes important.

Technical analysis is the only discipline we can employ to accurately deploy entry and exit points. Although we can use fundamental or technical to forecast in the primary stage, technical is the only choice we have to execute efficiently in the futures markets.

Finally, a technician can adapt to almost any market they wish, very quickly allowing the bigger picture to been seen with inter-market analysis across various key factors, from Stocks buy and hold to fast moving futures. This a key strength of technical analytical practices, which is not matched by a fundamentalist who requires large amounts of data in their specialist field to forecast, a technician simply pulls up a chart and begins work without specialist knowledge in the given sector.

Forex trading club and training from AiMS London Bedfordshire Hertfordshire Cambridgeshire UK

Advantages of Spread Betting

* No Stamp duty is payable (saving 0.5% compared to a traditional share purchase.

* Tax Free Profits: Profits on spread betting are not subject to capital gains tax.

* No direct commissions or fees are paid to the spread betting company.

* You can profit from falling or rising markets.

* They are traded on margin therefore bets can be placed with a relatively small initial outlay.

* A single account can give you Access to far greater range of financial markets.

* You can limit your risk using a “Stop Loss”.

* The ability to place very small bets, some companies let you place a trade of as low as 1p per point.

* Tax Laws are subject to change.

Drawbacks of spread betting

Financial spread betting is less suited to the long term investor,if you hold a bet open over a long period of time the costs associated increase and it may be more beneficial to have bought the underlying asset. You have no rights as an investor, including no voting rights and you will not benefit from dividends.

From Rob Lee of AiMS Trading Club and Forex training courses

London Hertfordshire Bedfordshire Cambridgeshire UK

Whenever I think of the Intra-day trader I think of the home trader primarily, that’s more than likely you, I’m going to aim this with an assumption, most of you work at home with limited live news information and most have not received an economics degree or study, and if you do you simply do not have the tools at hand to compute a complex Marco-economic news event, so why try? If you do have all required then ignore this post.

The Intra-day trader has a relatively simple task, find a trend and trade it for a short period of time, so why do Intra-day traders concern themselves with economic news and it under-laying properties?

Working on 15 minute or even 1 hour charts is akin to looking through the eye of a needle and then stating the view IS the entire world. The information gathered in the candles gives you very small decision processes that determine markets over all direction, trend or sentiment.  Frankly a market does not decide to change its sentiment on a single 15 minute candle; it accumulates its decision over many, many 15 minute candles which build up into larger time frames and so on until eventually the market is in total agreement.

What about news and the intra-day trader? The Intra-day actually does not need to know what the News is; he only needs to know the time it is released and the fact that it could change the small trend he is currently trading.  Whatever direction the News takes the market is of little concern, major news accumulated may drag the market down or boost the market up, but and it’s a big but, the Intra-day trader is not concern with tomorrow or even the next few hours, its right now they have the eye on.

Very often I see Intra-day students overly concerned with news and spend much time debating its effect, the near-term effect as I’m sure you all have seen, may be very different on a 15 minute chart to its overall effect on the daily charts, why concern yourself with it, Intra-day traders need to specialize in defining a trend and trading it, not becoming a 15 minute economist.

The first piece of advice I give every Intra-day student is very simple, Trade what you see, not what you hear, you are trend specialists not economists.