Swing Trading and Market Timing Knowledgebase

By: John Crane, swing trading guru

Price Leads Fundamentals

I not only believe price leads fundamental news, I have seen it happen more times than I can count. It is not uncommon for futures markets to top when the fundamental news is the most bullish and bottom when the news is the most bearish. I’m unable to count the number of times traders have asked me “How can the futures market be trading higher?  We just had a very bearish report.”  The answer is simple – we are trading the futures futures market, not the current or past futures market. In other words, the futures price has already discounted the fundamental news. The large commercial firms and professional traders are already looking into the future when the news or futures market reports are released. While the unsuspecting trader is stepping into the futures market because of a news story or a government report, the experienced traders are stepping out because the recently released information has already been factored into the futures market and it is time to look forward.

Don’t get me wrong. I am not saying that fundamentals do not influence futures market prices.  In fact, they can have a dramatic affect on prices. Market fundamentals of supply and demand are the ultimate decision-makers in the futures marketplace. These forces will move the futures markets over the long-term, while the technical side provides entry and exit signals in the short-term.

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**THE RISK OF LOSS IN TRADING CAN BE SUBSTANTIAL. YOU SHOULD, THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER OR OVER-COMPENSATED FOR THE IMPACT IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT.NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES.

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