I remember those days, when I use to work for ICICI Bank. Though as a banker we had many restrictions to trade in the market but still many colleagues and bosses use to trade on their own accounts.

It was a great organisation, where working was fun. Bosses were so cordial. Though Work and Life balance was little poor but still employees love to work hard with highest level of motivation. And most importantly the relationship between colleagues were excellent. Hardly you can find differences or politics. The bosses were inter connected, so they easily used to solve all the small issues with great precision.

All those who have worked for ICICI Bank those days, may admit that it was a great learning phase of our life. We use to call it as the breeding zone for knowledge.

Anyway, so those days in my office, I used to be the Novice trader amongst all of them. I had no idea about what happening in the market and why? 

My Colleague used to be a Chartered Accountant and he had the knowledge of the market, it’s news and everything, he used to recommend stocks to each one of us. Some did work very well and some didn’t.

I always found him talking about the News. He used to say: “This stock has bad news, so it should be booked out immediately. “This stock has a very good news, this should be bought immediately at whatever price we get it”.

This was most of the times his recommendations were. Now this is not limited to him, in my journey in the stock markets I have seen almost 90% participants talk about news. News is like an auto immune disease; any new participants enter the market first learns how to read the News.

And the general rule for news-based trading is “For Bad news go short or square off your long position, for Good News go long”.

And here comes all the News Agencies with their great experts. They produce tons of news from different sources and also gives a lot of recommendation based on that.

 Retail Traders trade on the basis of this news, some did work well and rest mostly fail. The retail traders never judge, why a News worked? or Why a News failed? Or they may be given a fake explanation of something happened in one corner of the globe and that has a direct impact on his portfolio.

Let us take an example, of a Scrip named “Ashok Leyland”.

On 29th March 2017 a very important news came about the Automobiles industry, the news was that the Supreme Court has imposed a ban on BS III compliant vehicles, and as per the news agencies the Auto Industry had a huge pile up of BS III complaint vehicles, hence this news appeared to be a major setback for the Indian Auto Industry.

Source - The Hindu

Source - Times of India

The next day, all the Auto stock prices fall down, so does Ashok Leyland by 6%. The entire market was negative on Auto stocks, all the Experts started talking about the effects of this Bad news, and they were mostly bearish on all the auto stocks.

But we assured the members to stay long at current market price. And the result was impeccable. The Bad News turned into a Very Good News and from there price of Ashokleyland made All Time High.

This proves that News give sudden impulse for sure but market always moves in the direction, the institutions want them to move. It’s only a game of Fear and Greed of the market participants, which at the end creates imbalances between Buyers and Sellers. And these imbalances reflect in the Charts.

Hence, we love to trade such imbalances with great precision by using “Price Action concepts with zero Indicators or Oscillators”. We sometimes trade against the news. We believe Good News can turn into bad news and bad news can turn into the good news. If we can identify the best levels from where price can turn in the future, then the next thing the bad news do, is to send the price back to our level and we take the trade with a very Small Stop-Loss and for a Big Reward.

We, at PG’s MASTER CLASS, teach our students to take trades based on Price Action only and help them to achieve Professional Level Expertise. We play the news as a contra indicator.

Disclaimer: Don’t try to play against a news without having sufficient knowledge about Price Action. Playing against the news requires Professional Level Expertise.