Predictably, the market is going to fade the headlines. You therefore have a potential win-win situation.Ī related section discusses ways to time market reaction to front-page news.
On the other hand, if the news is bad, so much the better for short positions. The market sells off anyway, because there was no one left to buy. You get circumstances, for example, where people are already long, expecting wildly bullish reports. He convincingly explains how the outcome often tends to be decided before the number even hits. He also outlines some concrete trading opportunities, such as in the immediate aftermath of government and earnings reports. An “archer” is more of a trend follower who waits for just the right opportunity before letting his arrow fly. A “swordsman” is primarily a range trader looking for numerous opportunities to buy low and sell high. His breakdown of trader types, for example, is readily identifiable. Still, Bennett is largely successful at conveying his points. The alternative is the reliance on intangibles, something that works for some, but is not easily translatable to the reader
Bennett contends the technique is overused in markets, resulting in people trying to fit an unknowable future into a model based on the past the arguable implication being it’s a futile exercise. Contrarianism is an important factor in trading success and it manifests itself in every facet of trading.Īnother recurring subject is that of “reductionist theory,” which is the distillation of something down to its most elemental parts. The main themes include the difference between the consensus view of an economic environment and the more relevant underlying forces the idea that unsuccessful traders follow the pack, which invariably is wrong and that the triumphant warrior follows the road less traveled. The author is in tune with what works and why, as well as what constitutes deceptive or useless “noise” that almost inevitably leads to losses. Warrior Trading doesn’t break much new ground, but it is pretty smart about the terrain it does cover. Warrior Trading: Inside the Mind of an Elite Currency Trader
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