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News is always priced in?
Many traders believe that news is always priced in, assuming that by the time an announcement is made, the market has already fully adjusted for it. While markets are forward-looking and often anticipate events, this belief is not always accurate. In reality, how much news is priced in depends on how expected the event is, the level of surprise in the data, and current market positioning. Surprises, shifts in sentiment, and the interpretation of news often cause major price movements even when traders thought everything was already factored in.
The belief that news is always priced in ignores how dynamic, emotional, and complex real-world markets are.
Why Traders Think News Is Fully Priced In
Several factors contribute to this assumption:
- Efficient market theory: Academic models suggest that all known information is immediately reflected in prices.
- Pre-announcement positioning: Markets often move ahead of scheduled releases, creating the illusion that reactions are already complete.
- Experience with minor news: For small, expected releases, markets often react very little, reinforcing the belief.
- Analyst consensus: Widespread expectations around data can make traders assume the result will match forecasts precisely.
However, reality often proves far messier, especially around high-impact news events.
When News Is Truly Priced In
There are cases where markets have already adjusted for news:
- Highly expected results: When economic data or central bank actions align closely with widespread forecasts, reactions are usually muted.
- Heavily telegraphed central bank moves: If a central bank signals a policy shift clearly and repeatedly, markets often adjust ahead of the decision.
- Repetitive information: News that merely confirms what traders already believe often results in little or no movement.
In these cases, price action before the event often “uses up” the energy the news would have generated.
When News Is Not Priced In
However, there are many situations where news causes significant reactions because it was not fully priced in:
- Unexpected results: Data that significantly beats or misses expectations (such as surprise inflation spikes) triggers major moves.
- Shift in tone or forward guidance: Even if a central bank meeting matches forecasts, the tone of future policy discussions can spark massive market reactions.
- Emotional overreactions: Markets sometimes exaggerate responses to news due to positioning imbalances, herd behaviour, or panic.
- Low liquidity periods: In thinner markets, even moderately surprising news can cause disproportionate price spikes.
Thus, believing that news is always priced in can leave traders dangerously unprepared.
How to Handle News and Pricing Expectations
Successful traders manage news events with realism and flexibility:
- Watch expectations carefully: Knowing not just the forecast, but also how stretched market positioning is, gives deeper insight.
- Focus on surprise elements: Markets react most violently to unexpected shifts, not to confirmation of forecasts.
- Observe initial reactions: The first few minutes after news can reveal whether the market sees the news as meaningful or already digested.
- Stay flexible: Prepare for different scenarios instead of assuming a muted or explosive reaction.
Analysing both sentiment and data is crucial for trading around news successfully.
Examples of News Not Being Fully Priced In
- US CPI surprise (2022): Unexpectedly high inflation readings triggered huge USD rallies and sharp equity sell-offs.
- Bank of England rate hikes: Markets expected small hikes, but hawkish forward guidance caused the British pound to surge beyond forecasts.
- Swiss National Bank shock (2015): Complete abandonment of the EUR/CHF peg blindsided traders, showing that not all policy shifts are telegraphed.
Each case proves that even in modern, information-rich markets, surprises happen — and they move prices dramatically.
Conclusion
It is completely false to believe that news is always priced in. While markets anticipate and discount known information to some degree, surprises, emotional reactions, and shifts in tone often create major new price movements. Smart traders prepare for a range of outcomes, respect the power of unexpected news, and adapt their strategies accordingly to thrive in dynamic environments.
To learn how to master trading during news events and navigate both expected and unexpected market moves, enrol in our expertly crafted Trading Courses today.
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Trading Myths
- 1:500 leverage is better than 1:30?
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- A bad trade means a bad trader?
- A chart setup that worked once will always work?
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- A trading journal must be detailed to be useful?
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- Admitting mistakes shows you’re not ready?
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- All execution is instant?
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- Anger improves focus?
- April is always green for stocks?
- Arrogance is a sign of mastery?
- Arrogance proves you're experienced?
- Ascending Triangles Always Break Upward?
- Asian markets are too unpredictable?
- Asian traders are more disciplined?
- AUD/USD is a trending pair?
- August moves are always false breakouts?
- Automated systems eliminate psychology issues?
- Avoid trading around news completely?
- Avoiding risk leads to long-term success?
- Backtested Bots Always Work Live?
- Backtested results determine superiority?
- Backtesting 1 pair means it works on all pairs?
- Backtesting doesn’t apply to scalping?
- Backtesting guarantees forward performance?
- Backtesting Is a Waste of Time?
- Backtesting metrics = live performance?
- Backtesting only works with robots?
- Backtesting should be done over a short period?
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- Bank traders use the same tools as retail traders?
- Banks always trade against retail?
- Beginners should never scale in or out?
- Being a Trader Means Being Self-Employed?
- Being profitable and teaching is a contradiction?
- Being quiet means you’re not successful?
- Big accounts are easier to manage?
- Big losses should be followed by big wins?
- Big Profits Mean You're a Great Trader?
- Bigger Account = Safer Trades?
- Bigger Positions Equal Better Profits? The Truth Behind the Myth
- Bitcoin is the only one worth trading?
- Bitcoin leads the entire market?
- Bitcoin never respects fundamentals?
- Bollinger Bands always show reversals?
- Bonuses Always Improve Your Trading?
- Bonuses Are Always Traps?
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- Bots are better than humans?
- Bots can outperform with no risk management?
- Bots don’t need backtesting?
- Bots don’t need VPS hosting?
- Bots work forever once profitable?
- Branding Yourself Makes You More Legitimate?
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- Breakeven trades are failures?
- Breaking rules temporarily is acceptable during revenge trades?
- Breakouts Always Lead to Trends?
- Breakouts Are Always Clean in Volatile Markets?
- Brokers Always Stop-Hunt?
- Brokers Don’t Make Money If You Win?
- Brokers hate scalpers?
- Brokers Manipulate Price Feeds Constantly?
- Brokers move the market?
- Brokers that offer leverage are scamming traders?
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- Candlestick Patterns Never Fail?
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- Central Bank Statements Can Be Ignored?
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- Copy Trading Guarantees Profits?
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- Curve fitting improves strategy?
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- Day trading is more profitable than swing trading?
- Day Trading Is the Only Real Trading?
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- Demo testing is a waste of time?
- Demo trading creates bad habits?
- Demo trading doesn’t improve discipline?
- Demo trading is the same as live trading?
- Detachment Equals Boredom?
- Directional Bias Works in All Conditions?
- Discipline = low risk only?
- Discipline is only needed for large accounts?
- Discipline means avoiding all emotions?
- Discipline means never losing?
- Discord trading rooms improve accuracy?
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- DMA and ECN Are the Same?
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- Edges are permanent?
- Education is only needed once?
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- Elections always move currencies?
- Elections only affect local markets?
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- Emotional detachment guarantees profitability?
- Emotional reactions to losses are weaknesses?
- Emotional Trading Is Always Irrational?
- Emotionally Connecting to Trades Makes You Patient?
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- Emotions Can Be Turned Off Completely?
- Emotions only affect beginners?
- Emotions should be eliminated?
- Equity curve must always slope upwards?
- EUR/USD is the easiest pair?
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- Every chart needs at least three indicators?
- Every losing trade teaches something new?
- Every spike is a manipulation?
- Every successful trader has perfect discipline?
- Every Winning Trade Improves Your Psychology?
- Excitement means confidence?
- Expensive = scam in trading education?
- Expensive Mentorship Is Better?
- Experience Always Beats Education?
- Experience beats rules?
- Experienced traders don’t make mistakes?
- Failure means you’re not cut out for trading?
- Faster internet improves win rates?
- Fear and Greed Can Be Eliminated?
- Fear helps with risk management?
- Fear should be ignored?
- Feeling nervous means don’t trade?
- Fibonacci works because it’s natural?
- Fibonacci works on all timeframes?
- Financial qualifications make better traders?
- Fixed Lot Sizes Are Best?
- Flash Crashes Are Predictable?
- FOMC minutes are useless to traders?
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- Forecasts are always accurate?
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- Forex is harder than stocks?
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- Forex is the most manipulated market?
- Forward testing isn't necessary?
- Free Content Is All You Need?
- Free groups are a waste of time?
- Free strategies aren’t profitable?
- Frequent Trading Improves Skill Faster?
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- Fundamentals Don’t Affect Short-Term Trades?
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- Funded trading is risk-free?
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- GDP is the Only Economic Data That Matters?
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- Geopolitical risk is priced in instantly?
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- Gold always rises during crises?
- Gold is the safest asset to trade?
- Good Mentors Don’t Charge Money?
- Good traders don’t feel losses?
- Green candles mean buy?
- Gut feeling has no place in trading?
- Hammer candles always cause reversals?
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- Having Followers Validates Your Strategy?
- Having multiple screens gives you an edge?
- Head and shoulders patterns are foolproof?
- Hedging Eliminates All Risk?
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- High Returns on Copy Profiles Mean Consistent Traders?
- High risk equals high reward every time?
- High Volume Confirms Market Direction?
- High-Frequency Trading Is for Everyone?
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- Higher leverage makes better trades?
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- If it stops working, it was never a real edge?
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- If you fail in demo, you’ll fail live?
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- If You Hate a Setup, It Won’t Work?
- If You Hesitate You’ll Always Lose?
- If you lose, it’s your broker’s fault?
- If you trade alone, you’ll fail?
- If you want success faster, work longer hours?
- If You Win, You Did Everything Right?
- If you withdraw, you’ll jinx your performance?
- If you're confident, you don't need risk management?
- If you're not profitable in six months, quit?
- If you're not profitable yet, you're wasting time?
- If you're not watching charts live, you’ll miss out?
- If you’re not excited, you’re not trading properly?
- If You’re Not in a Trade, You’re Missing Out?
- If you’re not profitable within a year, quit?
- If you’re right often, you’re better than the market?
- If your daily P&L isn’t steady, you’re inconsistent?
- If your equity curve isn’t steep, you’re underperforming?
- If Your Strategy Is Simple, You Don’t Need to Journal?
- If your system is good, you won’t need risk control?
- Ignoring your plan can sometimes fix things?
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- Inactivity Shows Laziness?
- Income targets should be consistent?
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- Indicators are more important than price?
- Indicators define the system?
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- Indicators work better with more signals?
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- Inside bars mean consolidation every time?
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- Instinct means overconfidence?
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- Institutional trading strategies are always better?
- Institutions always win?
- Interest Rates Don’t Matter?
- Internet speed defines your edge?
- Intraday Trading Is Safer?
- Intuition is guessing in disguise?
- It takes years to become profitable?
- It’s Passive Income with No Downside?
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- Journaling is a waste of time?
- Journaling is only for beginners?
- Journaling is pointless?
- Journaling Is Too Time-Consuming to Matter?
- Journaling Should Be Done After Each Session Only?
- Journaling slows you down?
- Journals are only for emotional awareness?
- Journals are only for losses?
- Journals don’t help in psychology?
- Journals must include charts?
- Journals Must Include Full Screenshots and Notes?
- Journals should only contain numbers?
- Journals Won’t Help with Emotions?
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- Large positions show confidence?
- Larger account sizes eliminate risk?
- Late-night trading is better?
- Learning ends once you’re profitable?
- Learning trading is like learning a hobby?
- Letting winners run means no take profit?
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- Leverage changes your strategy's win rate?
- Leverage is only for forex, not indices or crypto?
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- Long wicks mean big moves are coming?
- Losing means you failed?
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- Losing trades mean your system doesn’t work?
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- Losses mean your strategy is broken?
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- Lower Timeframes Are More Accurate?
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- Meditation Solves Trading Stress?
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