Description: Dealing with noise in forex rates trading is important if you are going to succeed. Read to see how to go about this.
It is a really tough situation for forex rates traders. They usually do all they can to ensure they are constantly connected and informed. They do this by scouring a lot of events and market news picking what they feel is relevant. At the end of the day, they find themselves struggling with information overload and thereby making numerous trading mistakes.
How can a forex rates trader avoid this?
Learn to see yourself as the expert
One thing many traders get from listening to experts over a period of time is that they are not really as good as they are often made out to be. They make mistakes an awful lot of time and their track record isn’t any different from the typical forex trader. In general, many forex rates traders learn to believe in themselves a lot more after they see that the experts also have as many losing trades as they do. So instead of reading too many expert opinions focus on developing your trading strategy to be much better than it is currently.
Learn to set priorities
In forex rates trading, certain information is much more important than the rest. Many traders don’t know this and this is why they are constantly acting as if all bits of information in the market are paramount to their success as traders. However, being able to prioritise the information you have is totally dependent on the trading strategy you are using. A scalper has to know as many details as possible but long term traders only need general information as their trade positions will not be affected by minor news releases.
Learn to ignore the TV
Many people often fail to understand that the bulk of the information being passed off as news online is nothing but guesswork and opinion of individuals with agendas. Of course you can keep an eye on CNBC and Bloomberg if you trade major releases but apart from this, any other information you get is nothing more than ‘noise’ that will end up confusing you. Again, listening to the news on TV is nothing but timewasting as they will never give you the right type of detailed analysis that you will need to make good trading decisions. So for you as a trader, it would be in your best interest to act on what you are seeing on your forex charts at any point in time while staying alert to changes in the general direction of the economy with a glance at the news.
You don’t need the little details
One good thing about forex rates trading is that you do not have to read all the paper work on financial data as a stock trader will do. Since you do not need these small details, there is no need getting yourself confused by them. In this market, you don’t need to concern yourself with anything that isn’t employment numbers, activity of the various central banks, inflation and GDP.
Always stick to your trading plan
Traders that get caught up in market noise tend to be those that are very emotional and subsequently disorganised. These kinds of traders often end up allowing fear to influence their trading decisions and this is why they are constantly looking for what other people think about the market, instead of trusting themselves.