Ben Warwick's Trading Strategy

In the forex market, news trading is one of the most popular methods of forecasting the market. It's based on the psychological reaction of the public to certain macroeconomic indicators, which reflect the state of the country's economy. However, it's not just the raw numbers that influence the market; political statements also influence it.

For example, the British mayor's latest statement on the prospect of Britain leaving the European Union forced investors to dump currency on the market en masse, causing the pound to plummet by two percent in just one day.

Just imagine the power of fundamental analysis if applied correctly and in time.

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 series of news items on market participants.

Ben Warwick first encountered the stock market while still a business student at North Carolina School of Management. In the 1970s, America was experiencing a talent shortage, and business administrators were even more valuable. Therefore, after graduating from the university's business school, Warwick earned an MBA.

Conjectures and confirmation of Ben Warwick's theory

As a student, he came across an interesting study on the stock market. The author indirectly touched on the impact of earnings announcements on a stock's subsequent price movement. At the time, companies were very secretive, and the stock market was dominated by rumors rather than actual figures.

Therefore, to avoid losses due to rumors, many companies began publishing key performance indicators. Ben began to notice that if the announced stock returns were higher than the company and investors had anticipated, the trend would gain significant momentum and persist for approximately 60 days.

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

Developing theory and creating your own trading strategy

Studying the impact of news on stock and futures markets, Ben Warwick compiled all his observations into a single, comprehensive book. Unlike modern news trading, where entering the market at the moment the news is released is crucial, Ben Warwick argues that this approach is more like playing in a casino, where your odds are 50/50.

His personal strategy and observations are based on the principle of measuring price momentum after the release of a fundamental indicator. Simply put, he doesn't rush into a trade if positive data comes out. For example, his strategy emphasizes waiting until the end of the day after an important news release. If, following a good data release, the asset's price rises at the end of the day, Ben confidently buys it.

When statistics are negative, Ben waits until the close of the day, and if the asset declines significantly by the end of the day, he sells. The most interesting thing about his approach is that he tries to avoid excessive market turbulence at all costs and trades on the residual effect after the publication of certain statistics. 

Through constant research and statistical recording, Ben has found that news trading is most effective in agricultural futures because the market is less politically charged and the raw numbers have a strong effect on market participants.

Ben Warwick made history as the creator of a new trading method known as "Event Trading." His basic principles and research have been adopted by many traders and successfully adapted for forex trading.