I was fortunate to spend most of my career at the Chicago Board of Trade as a broker in the 30-year bond pit. The ’80s and ’90s were the heyday for interest trading pits. Most days were filled with big swings and lots of volume. The pits were packed and often became chaotic and even violent after vital economic reports. I focused mainly on charting techniques early in my career and learned fundamentals by watching price action immediately after economic data were reported. I soon learned that sharp rallies in treasury futures followed weak economic data, and steep declines occurred after strong employment or retail sales and high inflation reports. I was learning fundamentals through order flow.
Late in my time at the exchange, I worked at a firm with an outstanding economist. We traveled to many firms sharing my knowledge of technicals and her fundamental views. We were a great team and customers responded well. Having a technical background was a great asset, but I did not become a well-rounded trader/analyst until I incorporated the lessons from my colleague. Fundamental data are what make markets move, while technicals are used to navigate trades while waiting on the next vital statistic.
I highly recommend viewing the economic calendar before each week begins. Stock market traders track earnings, but there are reports that affect not only the equity indexes, but also individual stocks and ETFs. Interest rates drive economies, so that should be first on your list of commodities to watch daily. A move in interest rates often impacts currencies, a currency is often connected to precious metals or energies, and energies may impact equities or grain prices.
To become a successful and well-rounded trader, pay special attention to the major sectors because they are frequently interrelated. A good trader knows that a move in a currency could affect energy, which could have impact on a stock or ETF or another sector. The major sectors are interest rates, equities, forex, precious metals and energies.
Senior Technical Analyst
Market Taker Mentoring, Inc.