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The internet has seen a massive growth in both the quantity of news and speed of delivery and many novice traders think this will help them win, however in most cases it simply helps them lose and lose quickly.

If you are looking at economic reports and news you need to consider one important fact first:

50 Years ago, 90% of FX traders lost and today the figure still remains the same – despite the advances in news forecasting and speed of delivery.

Most novices who watch news reports or trade off economic reports and fail miserably in their FOREX trading.

Why?

Firstly, they do not realize that news is discounted by the market immediately and this is more true than ever today with any news available in any corner of the globe in a split second.

Secondly, if they see a so called expert talking about why a currency should fall it may sound convincing but that does not mean the market will go the way they say.

Sure, it's a convincing argument but these guys are giving opinions and are NOT traders.

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An economist can always tell you why something has happened in hindsight, but is not so clever about telling you why something will happen.

Investors Determine Price Direction!

The fact is the news is not important in itself – it's how investors perceive the news that's important.

Humans make subjective judgments and all their opinions combined move the market price.

A Better Way To Trade

For most novice traders a better way of trading is to simply follow charts and use technical analysis.

As the marketing is a discounting mechanism you can simply assume all fundamentals will show up in the price instantly.

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You can then simply follow the reality, rather than trying to second guess where contracts will go.

You will trade on the reality of price rather than predicting it.

Keeping Emotions Out of Trading

When you hear a convincing argument it's easy to let your emotions get involved and trade with the losing majority.

Technical analysis allows you to set back from the market and see things without emotions and get a clear perspective.

The fact that the news is bullish or bearish for a currency makes no difference on where it will go.

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If you take major currency changes the fact is:

They tend to fall heavily when the fundamentals are most bullish and rally when they are at their most bearish.

Will Rodgers famously said:

"I only believe what I read in the papers"

He was joking of course but many FOREX traders do exactly this – believe what they read and hear and then lose.

Trying to trade off news stories for most traders is a complete waste of time and energy and sees them lose – do not make the same mistake.



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Source by Sacha Tarkovsky