Forex Trading Strategy Buy The Rumor Sell The Fact In Price Action

April 13, 2013 JoshTaylor

Most people who have been involved in trading in the markets for a significant length of time surely have heard about the saying Buy The Rumor Sell The Fact. It is an old trading rule, but highly misunderstood, and often quoted by traders that explains price declines that occur after an anticipated positive event has happened.

Read more about Forex Trading Strategy Made Very Simple – Price Action

Many traders stumble on buying the rumors without any in depth analysis, just based on pure emotions. Assessing the direction of the market based on economic news update doesnt mean it is not good but the veracity of it should be confirmed first before doing any drastic moves. Traders should not let greed overwhelm their judgement because most of the time it doesnt bring positive outcomes. Sometimes, focusing too much on the news, creates an opposite result from what the news imply.

A good example is the paired currencies EUR and US Dollars during the monthly U.S. Non-Farm Payrolls. Some traders thought that the news being released will place them on an advantageous position based on the implications of the report, however, they were mistaken. Price counters to what one might expect from the report. It knows no advantage.

Read more about Forex Trading Strategy: Price Action Trading Patterns

With this kind of trading strategy of basing ones decision on rumors, emotions and even luck, will not bring you anywhere. It is no more than guessing your fate by flipping a coin. Also, the market possesses a contrarian nature, where in the price will move in an opposite direction of the majoritys emotional perception. This is one of the reasons why most impulsive traders lose plenty of money. It is important to have a good strategic plan by learning proven Forex Trading Strategies coming from reputable traders and of course, in this website which offers Free Forex Entry Strategies and Free Forex Tips. There is no specific style in trading but through experience, patience and logic, one could develop a good Forex Trading Strategy especially in the utilization of Price Action.

Always remember that the price action is an important tool in predicting the market. It contains all the information you need to become an effective trader and it reflects everything that is affecting the market. Always remember KISS. keep it simple stupid! By making things simple (freeing oneself from the complex market indicators and trading software), one could save oneself from wasting time and effort. Stop losing your money, start getting yourself a solid education in price action analysis. It is a proven Forex Trading Strategy that I recommend without doubts.

Bottom line is there is nothing more than a simple and solid plan to reach your goal of becoming a successful trader by learning one Forex Trading Strategy at a time, avoiding making decisions based on rumors, emotions, and most importantly greed. Once again, Happy Investing and keep on reading our articles about Forex Trading Strategies for Beginners and Professional Forex Trading Strategies. With our everyday motto, learning should be fun!

Source:

www.learntotradethemarket.com/forex-trading-strategies/dont-trade-news-trade-price-action Websters New World Finance and Investment Dictionary (2010). Wiley Publishing, Inc. Indianapolis, Indiana.