Forex Markets Online News Sources
Forex Markets – Why Online News Sources will Lose You Money
Forex markets are exciting, and they’re the world’s biggest investment medium. With the rise of the Internet, we’ve seen a huge rise in the number of tools available to traders.
There are a vast number of news sources that currency traders can tap into, with the click of a mouse. However, there’s a fact you need to consider – and it may surprise you. Despite all the advances in communications - and the large volume of news available, the ratio of winners to losers remains the same in the Forex markets: 90% of traders lose money – meaning that only 10% of traders make a profit.
Online currency traders think the news helps them – however, in most cases the news ensures they lose money - for the following reasons:
1. The markets discount
All the news is instantly discounted by the markets - and in today’s world of instant communication, this is truer than ever before.
If you want to trade profitably, then you need to ignore the news. Markets are looking to the future - and for this you need to study trader psychology. You can do this with technical analysis - and a simple equation will explain why:
All Known Fundamentals + Investor Perception = Market Price
Humans decide the value of currencies just as they do in any investment market.
By studying forex charts, you are seeing the whole picture – and as investor psychology is constant, it shows up in repetitive patterns that you can trade for profit.
2. They’re good stories but …
When trading forex markets, those online currency stories are convincing - but that’s all they are – stories - and they won’t help you trade profitably.
The financial writers are convincing and knowledgeable - but they’re not traders – they’re simply writers of stories that excite the emotions.
If you listened to the news, you’d have bought the coming Japanese yen bull market - which still hasn’t arrived after several years. Or you could have bought at the top of the market in 1987 - and the tech bubble of the 1990’s.
All the news claimed the market would go on forever, but what happened next? Prices crashed.
Any market is always most bullish at market tops, and most bearish at market bottoms - so it’s pretty obvious that listening to the news can harm your chances of currency trading success.
3. Financial news excites the emotions
The biggest mistake any FX trader can make, is letting their emotions influence their Forex trading strategy. If you want to win, then you need to remain disciplined.
Humankind, by its very nature is a pack animal. We like to be a member of the pack - as it makes us feel comfortable. In trading, this is a bad trait to have - you can listen to the news and feel comfortable, but it will not make you money.
In trading, you need to stay disciplined and isolated. Remember, the majority of traders are wrong - and they listen to, and trade with the news. Don’t make the same mistake – you don’t want to be a member of the losing 90 percent of traders – better to be alone, and in the winning 10 percent.
Will Rogers once said:
“I only believe what I read in the papers”
He was saying it tongue in cheek, and was joking – but many Forex traders believe what they read - and lose money because of it.
To avoid this money-losing trait, use a technical system - and try to ignore the news.
In the Forex markets, if you use a technical currency trading system, and ignore the news, then you’ll be trading on the reality of price. This will enable you to stay detached and disciplined - and achieve currency-trading success.
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