Forex Trading - if you Want to Win Don't Listen to the News!

By: Sacha Tarkovsky

It is my firm contention that if you listen or pay attention to the news in forex trading you will lose.

The fact is in recent years and with the rise of the internet there is more and better news but do more traders win than 20 years ago?

No success is dependent on something else, not economic data.

Success I futures markets is dependent on something else:

A study of human psychology.

But surely supply and demand fundamentals move markets?

Yes they do to a degre, but it is humans that buy and sell and it is people who actually determine price.

If it was a simple case of studying supply and demand fundamentals a lot more traders would win, but they don't and that's a fact.

You need to study fundamentals combined with human psychology and see them as a whole.

The best way to do this is a system based upon technical analysis.

It actually studies both together.

As economic data comes out it simply assumes that all fundamentals are reflected in the price and show up in price action.

But it does something more:

It studies human psychology, which is constant and shows up in repetitive price patterns.

Therefore we have:

Fundamentals + Human Psychology = Price Action

And a chartist by following price action will study both together.

Take a recent example of how hard it is to study fundamentals in isolation.

Stock markets have tumbled around the world based on lower growth in the USA and China well, the fundamentals have been pointing that out for ages.

Yet until yesterday prices were rising, so what good would the news have done you?

Not much.

You would have been selling a bull market and losing as trader's emotions and greed propelled prices higher despite bearish news from weeks or months ago.

This happens all the time in stocks, currencies or any other market.

Human psychology pushes prices to far up or down despite the news.

Viewing the market from an objective point of view

A chart allows you to step back and see the bigger picture without emotion and look for repetitive price patterns.

If you pay attention to the news, your emotions get sucked in to your trading and when they do, you will join the losing majority.

Act on what the price action tells you.

You will then see the fundamentals and human psychology combined, which is a great way to step back from the mayhem and see things from a non emotional and disciplined perspective.

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