In the world of trading people have devised all types of methods for trying to turn a profit. Some are fundamental traders while others are technical, and some use indicators while others focus on price action. The aforementioned traders make up the majority of traders, but there is another group. A group that some might call reckless. A group that has no chance of achieving long term trading success. This hopeless group is known as news traders.
Guest post from visionsofaffluence.com
If you are unfamiliar with news traders let me explain to you exactly what it s that they do. Unlike most traders who only use the news as a guide, news traders instead use the news or all of their trading decisions. They do this in one of two ways. Either they will make a guess as to what the news will be and the markets reaction to it, and then proceed to open positions in anticipation of the announcement. Or they will wait for the news announcement and then quickly open a trade in the direction of the markets reaction. You may get lucky with these methods from time to time, but neither of them are viable in the long term.
This is because when you trade like this you are essentially gambling. You are betting on which way the news is going to lean and also on the markets reaction to the news. This might be a more acceptable form of trading if the markets reaction to news was in any way predictable. You see while conventional wisdom states that if news is good for a currency is good then it will get stronger, and that if the news is bad then it will get weaker, but that is not always the case. There are times when the news will be good but the currency will actually get weaker or the news will be bad but the currency will get stronger. There also times after news releases when a pair will quickly move in one direction only to turn around and move in the opposite direction just as fast. There are even times when the market won’t react to news at all. All of this adds up to make trading the news very unpredictable and unsuitable for any trader that wants to have long term success.
It is very possible to have success over the long haul in this business, but you have to be willing to put in the work. There are no shortcuts in trading, and thinking that you can be profitable by betting on the news is ridiculous. News trading is laziness in its purest form and if you engage in it you are better off just flipping a coin to decide your trades. If you want to be a trader then get out there and do some real analysis so that you can take some informed and logical trades. That’s the only way you will ever be successful.
If you want to discover what it takes to be able to trade for a living. Then visit visionsofaffluence.com
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