The Danger of Forex News and Tips
Financial magazines and websites are full of Forex news and updates. You can also find tons of Forex tips from these sources or even from people on the street. Everyone seems to be an expert. The truth is that most of these people are far from experts in forex trading. In fact, some of them are totally ignorant of the true nature of the market and how it works.
That’s the main reason why it’s dangerous to follow Forex market news blindly. A lot of these news items and analysis articles are just the opinion of a single person and one who may have theoretical background but little to no real knowledge of the market.
The second danger in following Forex news is that it usually arrives too late for you to really take advantage of it. By the time something reaches a newspaper, it has already been read by thousands of professional traders in banks and financial institutions. They always get the news first. While you’re reading an article, so are thousands of other traders. This means that everyone is influenced in the same way. You don’t have an advantage, you’re part of a flock that’s being driven.
Of course, being aware of what’s going on is important, and knowing the news can lead to more profits, but be aware that Forex trading news items aren’t that effective. In fact, because you will usually not be among the first to read the news, you may even be too late in making a profit and catch the market while it’s going in the wrong way.
As for trading by Forex tips, always question the source of the information. Even if this person has an MBA, does he or she really know anything about Forex?
I’ve seen too many traders fall victim to useless Forex trading tips. You need to develop a healthy sense of skepticism. You also need to educate yourself on the market. In that way, you’ll be able to tell the useful news from the useless and the true tips from the false.