Thursday October 13, 2022 - 10:28:30 GMT
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[Forex View] Stupidity of Trading on Data
123rf.com
The stupidity of trading on a fractional miss in data still amazes me but this is the hand we are dealt.
Take today’s long-awaited US CPI report. The focus is on core inflation, which is forecast to rise by 6.5. % year/year.
Let’s say it comes in at 6.4%, there would likely be a relief rally in risk. But what happens if it comes in at 6.6%?
So, let’s look at the math. If the actual data is 6.44% it would be rounded to 6.4%. On the other hand, if it is 6.45% it would be rounded up to 6.5%
Similarly, if the actual data was 6.54% it would be round to 6.5%. At 6.55%, it would be rounded to 6.6%.
So you can see why I say the stupidity of trading on a fractional miss in data still amazes
me.
The reality is that markets move on a surprise, such as a miss in a data release. However, a fractional miss in data should not be considered a surprise.
Whatever the case, what really matters is the reaction to the data, especially after any knee jerk response to the news as that will give a clue to market sentiment and the current imbalances between supply and demand.
Take surprises out of the market and get in sync with the current imbalance in the market by getting access to The Amazing Trader
Jay Meisler
Co-founder, global-view.com
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