Ben Warwick Trading Strategy

In the Forex market, news trading is one of the most popular methods of market forecasting. It is based on the psychological reaction of the crowd to certain macroeconomic indicators, which reflects the state of affairs in the country’s economy. However, it is not only dry numbers that influence the market, but also political statements.

For example, the latest statement by the British mayor about the prospect of Britain leaving the European Union forced investors to massively dump currency on the market, which caused the pound to collapse by two percent literally in a day.

Just imagine the power of fundamental analysis if it is applied promptly and correctly.

The President of Bacon Investment Corporation, better known to the general public as Ben Warwick, is one of the active traders who developed fundamental analysis as such, and his trading strategy and developments confirmed the importance of fundamental analysis and the impact of a number of news on market participants.

Ben Warwick first became acquainted with the stock exchange while still a student at a business school in North Carolina. In the 70s in America there was simply a shortage of personnel, and business administrators were even more valued. Therefore, after graduating from business school at the university, Ben Warwick received a Master of Business Administration degree.

Conjectures and confirmations of Ben Warwick's theory

As a student, he became acquainted with an interesting study that concerned the stock exchange. The author indirectly touched upon the impact of the announcement of a stock's profitability on its further price movement. At that time, companies conducted very closed activities, and the stock market was dominated by rumors rather than real figures.

Therefore, many enterprises, in order not to suffer losses due to rumors, began to publish basic profitability indicators. So Ben began to notice that if the announced return of a stock was higher than the company and investors expected, then the trend movement began to gain very great strength and lasted for about 60 days.

This first study and conjecture was confirmed, which actually forced Ben Warwick to test his theory about the influence of fundamental indicators on futures .

Development of theory and creation of your own trading strategy

While studying the impact of news on the stock and futures markets, Ben Urwick compiled all his observations into one large book. In contrast to modern news trading, where it is important to enter the market at the moment the news is released, Ben Warwick argues that this approach is more reminiscent of playing in a casino, where your chances are 50 to 50.

His personal strategy and observations are based on the principle of measuring price speed after the release of a fundamental indicator. Simply put, he does not enter headlong if positive statistics have come out. For example, according to his strategy, it is important to wait until the end of the day after the release of important news. If, after a good indicator, the price of an asset rises at the end of the day, then Ben boldly buys this asset.

If the statistics are negative, Ben waits until the day closes and if by the end of the day there is a noticeable decline in the asset, he sells. The most interesting thing about his approach is that he tries in every possible way to avoid excessive turbulence in the market and trades on the residual effect after the publication of certain statistics.  

Through ongoing research and record keeping, Ben has found that news trading is most effective with agricultural futures because the market is less political and the raw numbers have a strong impact on market participants.

Ben Warwick went down in trading history as the creator of a new trading method called “Event Trading”. Its basic operating principles, as well as research, have been taken as a basis by many traders and successfully adapted for trading on the foreign exchange market.