How Should I Use Forex News

Today, the internet is making society at large information-rich in a way that could not be imagined just a generation ago.

World events flash round the globe in seconds instead of the hours or days that once was the norm. The side-effect of this high speed knowledge is the all too common perception that we are being overwhelmed. Rather than a dearth of details, we now have too many and suffer from what is called information overload.

With the forex market being particularly sensitive to the economic, social and political happenings of the world stage, getting the right intelligence is therefore vital. And pivotal to this information-gathering exercise is the quality and analysis of the data. In other words, recognizing which sources are reputable and reliable, and knowing which to either ignore completely or at least treat with a healthy measure of skepticism.

The danger in analyzing the many variables that influence the forex market is that we can unwittingly fall into the trap of hearing what we want to hear. Our knowledge filters can become too refined, too fine tuned for our own good without us even realizing. Until it’s too late. and then it’s an expensive lesson well learnt.

Information gathering should be eclectic, constantly evolving and measured. The goal is to build up a picture using a variety of sources, giving appropriate weight to each, to enable considered analysis and judgment to be brought to bear on the decision making process.

While there ought to be structure to the process, there should still be a degree of flexibility applied in arriving at trading decisions. The head may have precedence, but there should still be room for heart, gut feelings and good old fashioned hunches.

In this regard, most forex traders fall into two camps – the techies and the fundamentalists.

Technical traders rely heavily on charts, trend graphs and multifarious mathematical and statistical analyses to help decide when to buy and sell.

Their counterparts, the fundamentalists, favor price prediction based on the interpretation of economic information. This ranges from mainstream financial news reportage, government issued performance indicators and reports, not to mention pure rumor and speculation garnered by networking or online on web sites, discussion fora and newsgroups.

Overall, though, the most dramatic value shifts in forex trading occur when the unexpected happen. Whether it is a sudden rise in interest rates or a surprise election result, the effect on the forex can be the equivalent of heaving a boulder into a mirror-flat pond.

That said, in an environment that feeds on information, the irony is that as often as not it’s the anticipation of an event that propels the forex market rather than the actuality of the event itself.