This post is not really complete but I will publish it anyway and can updated over time.
Clearly you have to look at the calendar and know what is going on. A lot of the terms are alien to a new trader so it takes a long time to get used to the markets reaction to them. A post I wrote before on “what moves the bond market” has a useful pdf about the importance of surprises in data on the price afterwards.
You can get a calendar of events on many sites, I prefer fxstreet.com/economic-calendar/.
The following shows fx volumes by time and to be fair it is similar for equities, 8am-10.30am GMT being the main times when European volume is highest, then 1.30-4.30 GMT during the US premarket and when Europe and the US are open together.
It is a huge mistake to open positions coming into major news. If you are not algo trading then you are at a big disadvantage during these thin and volatile times. If you miss a move there is not much you can do about it.
Watching relative volume and ATR are very important to me, as mentioned in atoast2trading.wordpress.com/2013/11/24/es-range-vs-volume/
it is perfectly normal market action for prices on an uptrend to peak at a resistance level a couple of times, retreat, and then resume that uptrend. It is a challenge for the analyst to determine whether the decline from a peak is the indication of the development of a valid double top or simply a temporary setback in the progression of a continuing uptrend.Analysts, therefore, advise cautious investors to wait for the price to fall back and break through the confirmation point before relying on the validity of the pattern. Many experts maintain that an investor should wait for a decisive breakout, confirmed by high volume. Others, like Bulkowski, are not so reliant on high volume at the time of breakout but do agree that the higher the volume at the time of breakout, the further the decline in prices that the pattern will register.
“imagine how many patterns exist in the longer time periods usually considered by classical chart analysts, like in a three-month period. Some of the hidden patterns are not even regular or symmetrical formations but can be more important than some of the formations immediately screened visually or by chart software. Even worse, some of the patterns in longer-term data have no clear description because of fuzziness and they are probabilistic formations, like a wave function in quantum mechanics. Does it make sense to select the ones that are easily discernible and work with them? Absolutely not because what one does not see or that one ignores is what it can hurt him most”.
This old chart shows why volume levels are important:
An example from yesterday:
1865 was a recent high volume area, buyers were not accepting this and failure to improve on this led to a sharp markdown of price to the last area of value where trade was facilitated.
You need to remain impartial and recognise these patterns.
I highly recommend reading “volume spread analysis” by tom williams” and
These last 2 resources may help you to plan a trade and trade the plan. The markets are in constant motion and hard to figure out what is going on. If you are confused or your setup is not present then best stay out.
I promised a post on psychology but I have written a lot about this elsewhere