Today, forex trading
news is more plentiful than ever. There are numerous sources to choose
from and there all delivered at the click of a mouse, so you can get
breaking news whenever you wish.
Here we will look at how to use Forex trading news and mistakes to avoid.
First let's start with a rather startling fact:
100 years ago 90% of traders lost and today the ratio still remains the same.
This is despite better more frequent Forex news, better computers, more
powerful software and more information than ever on the markets.
The fact is knowing the news won't help you win - in fact, it generally helps traders lose! There are 3 main reasons for this:
News is discounted in a split second.
In today's world of instant communications news is discounted
immediately, so by the time you have seen it and had a chance to act
upon it, the moment has gone and the market is looking toward the
future.
News is Stories
Those analysts are so convincing with their arguments! Their normally
great at explaining what has happened - but you can't trade off what
they say, as they have no idea what will happen - there simply stories
and opinions.
Will Rodgers once said.
"I only believe what I Read in the papers"
Now he was joking, but its surprising how many traders take what they hear on the news as a recommendation to trade.
News Gets Your Emotions Involved
Humans don't like to stand alone and the news reflects what the majority
want to hear but that is completely different from what you have to do,
to trade to win.
The bulk of traders lose and the bulk listen to the news, so if you
avoid it, you can step aside and not let your emotions get involved.
If you do this, you can trade in a disciplined fashion and join the elite minority of winners.
If you use forex charts and simply follow price action, you are far more
likely to be successful than you would be by following news stories.
WHERE THE NEWS CAN HELP YOU!
There is one great way to use the news:
If you see a very bullish or bearish market and the news supports the
prevailing view but the market does not react the way it should - then
its time to look for a contrary trade and time your entry points via
your forex charts.
It's a fact that:
Bullish markets collapse when the fundamentals are most bullish and bearish markets rally when the news is at its most bearish.
If you can look for these turning points on your charts and find the
news suddenly stops pushing the market the way it should, a contrary
trade is developing and a big profitable trade is shaping up.
Finally
The way to use forex news outlined above, is a very powerful profit tool
but completely different to the way most forex traders use it!
