Lessons › Fundamentals and news › Putting it together: news and charts

World 7 · Fundamentals and news · lesson 14 · level 4

Putting it together: news and charts

Use the news to know what could move the market, and the chart to decide where and when to act.

In one line

Use the news to know what could move the market, and the chart to decide where and when to act.

Explained simply

Think of planning a road trip: first check the weather for the whole region, then the traffic on your route, and only then pick the exact turn to take. A top-down check works the same way, from the big picture down to the chart. If the big picture and the chart disagree, you slow down or wait.

The lesson

A top-down check starts with the big picture (rates, economy and sector), then the market's own news and calendar, and finally the chart for trend, levels and a clear stop. Fundamentals help explain why a market might move, while charts help decide entry, exit and size. When the two disagree, many traders simply trade smaller or wait. A written checklist keeps the order the same every time.

A worked example

Illustrative example: a trader's normal risk is 1% of a 10,000 balance, or 100 (10,000 times 0.01). The chart shows an uptrend, but a high-impact rate decision is due tomorrow, so the checklist says trade smaller and risk is halved to 50 (100 divided by 2). With a stop 2.50 below entry, the position is 20 shares (50 divided by 2.50) instead of 40 (100 divided by 2.50).

The same idea at four levels

1. Beginner. Look at the big picture first, then the market, then the chart.
2. Foundation. The funnel runs: economy, sector, market news and calendar, chart, plan.
3. Intermediate. Fundamentals explain why a market might move; the chart decides entry, stop, target and size.
4. Advanced. When news and chart disagree, trade smaller or wait, and never let a news story override your stop.
5. Expert. Experts finish the checklist before entering, write down the reason, and never use fundamentals to justify a trade they are already in.

Mistakes to avoid

• Letting a strong news story override your stop.
• Using fundamentals to justify a trade after you have already entered it.
• Skipping checklist steps when a setup looks exciting.

Goal of this lesson: Combine fundamentals, the calendar and the chart into one pre-trade checklist.