Great comment on using the news

The below is from John,  posting at Daneric blog.   If you haven't visited Daneric, you should.

What John says rings true with me.   Actually for my trading systems, I have printed what he said and put it in my 3 ring binder as a constant reminder on how to use the news.   Also true about the empathy for real people, but a cold blooded trader of the markets.   Some might think that shorting NKD (Nikkei futures) during the disasters was "Evil".   This is easy to understand, in fact 10 years ago I would have felt the same.   A short on NKD is not "shorting Japan", it is taking the other side of the bet from someone who thinks NKD will go up.   Simple as that.

Thanks for reading and fine to disagree. That makes life interesting. I always try to keep open and analyze things objectively as a scientist and constantly pull in differing opinions and analyze them in case I need to change. I have no real emotion at all. Some say I am cold blooded when it comes to some things like the markets in general. With people I am very compassionate but with markets no emotion - just data streams.
When I am trading I do not care how many people are dying or how many are suffering - just markets reaction to the deaths and suffering. But when I walk away from my trading desk, I am sending money to those in need and helping others.

------news content versus news reactions------
#1) When a bull market, which we are in now, discounts bad news and in this case very bad black swan type news and quickly resumes its upward trend that means the bull market is still strong. If however this bull market reacted to the recent news and went down 15-20% and stayed down, that would mean the bull market had lost power and was maybe over or needing a longer term serious correction to restore itself.

I do not listen to the news as much as I just watch the markets reaction to the news. The only thing that is important is the markets reaction to the news. For EW purists, that is the wave pattern playing out. When news is posted or earnings report. I look first look at the markets' reaction to it before I even look at the news or report. Then I later go back and read the full story. Did they buy it? Discount it? or what. For example earnings period is coming up. When I know the time a report is being posted, I watch the running stock chart and try not to even look at the news posted. I don't care what the report said. How did the market react to it?

When they post economic news, I look at the market reaction first and not even the news at all until later.
If you are a trader, especially day trader, you may need to have your hand on the buy or sell button instead of wasting time reading the story. The algos read the story in a couple seconds and then trade. Your position could go down 10-15% before you get done with the third paragraph of the story. Finger on the buy/sell button. Watch the tape. Then later read the story.

The reaction to the news not the news itself tells you the emotional foundation of the market. Also remember that the people who control the markets also control a great amount of the news. So I watch carefully to see what news is being posted and how it is treated. For example. Japan Nuclear situation is not better, but last weekend the mood changed over the weekend and they decided to discount that news and not post it and glamorize it. When they were over doing it, they obviously wanted the market to go down. So last Monday I could tell they had changed the tone of the same news so that meant they were done with that part of the correction for now. Later of course they can bring back some of this news if they want the markets to go down more.

Because of the news publication mood changed quicker than I thought, I changed my forecast from most likely to test the lows or go lower again. To not likely to unless something new and even more horrible happened out of their initial control.