shopster said: how do you trade it ........? Click to expand...

Yes, that's the $64 thousand dollar question isn't it. Chris Lori teaches a very technical approach to trading but maintains that keeping informed about fundamentals is important. I happen to agree but that isn't much help to most people really. It is easy to end up rather confused.My view is that maintaining an awareness of the trading context that comes from fundamentals is the worst explained and taught area in all of so-called trader education. Most people are completely unprepared for this task. Quite simply, most lack sufficient knowledge of the fundamentals and skills in interpreting their likely impact to be able to build them meaningfully into an effective trading plan. (Let's be honest, most retail traders don't evena written trading plan, much less a proven effective one, and just can't be taken seriously.) Still, we can't blame 'normal' people when supposedly expert economists demonstrate time and again that they certainly don't have a clue.So if we accept that most people are never going to undertake a serious and effective comprehensive education in economics or finance we end up with various possibilities. One option is to completely ignore fundamentals, to be a purely technical trader. Another is to adopt one or a very select few advisory sources in which some reasoned trust can be developed and then work out how to actually use such a service in an effective way. Another might be to build a plan around specialising in one or two key economic indicators and the way they impact your chosen market or markets.I guess the options are many and varied really. What's important is achieving real understanding and maintaining focus in application. Just grabbing a bit of information from here, there and everywhere, or even just relying on a favoured source or two sometimes, maybe, if you feel like it, or trying to get by with a half-cocked understanding, just isn't going to cut the mustard.The truth is, as every trader knows, we trade price now with some expectation of where it will probably go at some time in the future. Our time frames all differ, but this remains true whether you are scalping a fast-moving market or entering a long-term position trade. We have all seen times when markets behaved just like economic theory (and remember, that's all any economics is, just theory) predicts and times when it did the opposite and times when it did something else. Defenders of the economics faith would say that the theory was always right but that traders sometimes misjudge the timing.I would argue that while much economic theory is sound enough, it is unsuited to the application of informing short term trading. Sure, sometimes it works out, but sometimes it doesn't. The reliability and validity just don't stack up all that favourably for short time frames. I find excuses like, "oh, the data was well anticipated and already priced in" or this beauty, "the results disappointed the market" and similar other post-event attempts at explaining away the uselessness of fundamentals to traders to be quite feeble, though sometimes highly amusing.Another thing I find amusing is the differing "orthodoxy" in perspectives from various sources. Maybe most people look at the wide variety of views opined by economists, especially big bank and major fund economists, and just shrug it off. I find the diversity fascinating and can have a good giggle at the way they squirm when the evidence that they have been incredibly wrong for ages finally comes home to roost. To me, it isn't that they can be so wrong for so long that is amazing but that anyone still believes that any one of them is ever right.Market movements are phenomena best explained by mass psychology, not economics. I like to think of it as being a lot like the ocean. We have waves, and swell and tides in the movement of kinetic energy and we have very similar movements of emotional energy in all large markets. I have a good grasp of economics and a better one of psychology and I still reckon that most retail traders are far better off concentrating on being excellent technical traders. The smart thing to do when big economic data is about to hit the market is to not be there, or accept that in reality one is just gambling.Anyway shopster, that's my take on it. Perhaps the short answer could be, "very, very carefully" and a better answer might be simply: "you don't."