Sometimes changes in the markets are coming with expectations of news and reports.
And that is the time of uncertainty and anything-goes approach. Expectation and consecutive news are the reason for a certain percentage of the market movements. And we are about to find out what kind of moves can be expected while we are expecting.
There is such thing as consensus market expectation.
Imagine that all the traders are surveyed before the news arrives. They are asked one question – what do you expect from the changes? And all of them give answers. All of the answers and forecast are then added together and pooled into an average prognosis. That is what consensus expectation is.
We are then left to wonder what the results are going to be like. And here we can have three different results:
- As expected – data are similar or very close to what was expected by the community.
- Better than expected – data and reaction were better than expected.
- Worse than expected – worst case scenario. Data and results are worse than expected.
It Is important to early determine what reaction you are expecting form the markets as what follows next is going to be the fate of your money and your winnings.
Here a WHAT IF game is very strong. What of data is bad and the currency falls. What if data is neutral and currency falls? What of data is good and there is a surge? A lot of question that your winning is going to depend on.
Here we need to be prepared for different scenarios and different developments. How can we do it? by preparing to it and answering all the questions that you may have. Taking in as much data on the subject is also not going to hurt. Our only weapon in this is being as informed as we can be.
Data will always be revised. Report are always going to come out. This is the usual flow of the economy. All we need to so is simply make our peace with it and trade no matter what.
And that is what fundamental analysis is all about.