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bar and the volume will tell me the story better than the actual news. If
you feel comfortable seeing what the news is, that is ok. Try not to
analyze the news too much.
Buying On A Good News Story
Here is how just buying on a good news story on a market can get you in
trouble. Let’s say the news came out and it appears favorable. Prices
are moving up and the volume is good, so you just buy the market
before the bar is closed. Then after you buy, sellers come in and the bar
closes on the lower half with high volume. Guess what kind of bar just
formed? You guessed it, the classic ART® “One-Bar Reversal” on
increasingly high volume.
Then on the next bar the market sells off more and triggers a short
trade. Now you must ignore the news, and should sell your long
position and immediately go short. If that news event formed an
opinion in your mind that prices will go higher, you won’t want to sell
your long position.
The news just took you out of the present moment and put you into
hoping the market might turn around based on the news. And as we
said before, as soon as you start to hope, you’re not trading well. Use
the news as a confirmation to the signal and not the signal itself.
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