Priced in???

[No Time]

Hi all,

Can somebody shead some light on the topic of a news release being "priced in to the market" for a certain currency pair? I understand the definition, but not clear about timeframes, amounts priced in, and any unfavorable impact of an indicator being priced in pre release.

Any help on this topic would be great.

Thank you in advance.

NoTime

 

[3BlackCrows]

Hi all,

Can somebody shead some light on the topic of a news release being "priced in to the market" for a certain currency pair? I understand the definition, but not clear about timeframes, amounts priced in, and any unfavorable impact of an indicator being priced in pre release.

Any help on this topic would be great.

Thank you in advance.

NoTime

Hi Notime,

From what I can gather, the term ''Priced In'' seems to be a carry over term from the Stockmarket regarding a company's news release.

With releases you will have 3 numbers:

1. Last release figure
2. Consensus figure - this is what the figure is generally expected to be.
3. Actual Figure

If the pair is in a downtrend for example before the figure is released, if the actual figure that comes out is near the consensus figure, it wont really affect the trend which means the figure is already taken into account regarding the trend.

If the figure is worse than the consensus figure, it will give the trend a large boost downward.

If the figure is much greater than expected, you could see a reversal of the downtrend for 20-50 pips or more.

The opposite can be said for a prevailing uptrend before release.

As you said, you probably already understand this.

As for the timeframes, it would be as soon as the news is released. The figure would have to be at an extreme level opposite the consensus for it to have an impact in the opposite direction of the prevailing trend. It's probably best to get Felix's email signals for an idea of figures that would affect the pair.

The unfavourable impact would depend entirely on the actual figure released as described above.

Hope this helps - Happy Trading!

 

[No Time]

3BlackCrows,

Thanks for the reply. That is exactly what I was asking. I do receive Felix's signals and they are great.

I think I got it, please correct me if I am wrong:

Most of the major important economic releases are priced into the market leading up to the release and "priced in" based on the concensus or forcasted figure.

Thanks a lot.

 

[No Time]

3BlackCrows,

Thanks for the reply. That is exactly what I was asking. I do receive Felix's signals, they are great.

I think I got it, correct me if I'm wrong:

Most major economic news releases are priced into the market leading up to the release and are "priced in" based on the concensus or forcasted figure.

Thanks,

NoTime

 

[3BlackCrows]

Yup you go it NoTime

That's exactly what happens.

You will notice that there are figures Felix provides as a trigger for News trades precisely for that reason.

You will also notice that he also gives approximate pip ranges of how far the market will move if the trigger is hit.

This is because long term sentiment will always rule over something short term like a news release (unless in the direction of the longterm trend) so while the market may move suddenly in one direction, it is usually only for a brief period such as an hour as price will find a support/resistance level then carry on in direction of the longterm trend.

This is only for triggers that go against the longterm trend though.

Hope this helps - Happy Trading!