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Trading News for Beginners – What News Do Traders Read?

Usually, you will be offered a choice when asked this question. When it comes to financial news, the choice is not so obvious, the answer really depends on the source and the type of article you read. Good or bad news also depends on your personal bias. This can be in the form of trading and investing that you hold and are interested in, or in the form of your own financial goals.

Confirmation bias occurs when you read news articles that only match your assessment of the financial situation.

For example, you believe that the stock you own will pay good dividends for a certain quarter because you've read an article from a trusted source that says product X sales were good during that period. Then search for “Product X Sales” and read more news articles about how well they are selling. This confirms your belief that there will be a strong dividend payout. Due to confirmation bias, you can ignore other news articles that cover various aspects of the stock's performance, such as: B. decreased sales in other product lines or increased debt payments.

Being biased is natural and it will be difficult to make a decision if we don't have our own way of taking a position. Being aware of your own biases can be helpful for risk management techniques such as placing stop losses when trading or diversifying your stock holdings when investing in the stock market. Even if you are a firm believer in news articles and your financial goals, you should keep market risk in mind.

message type trading forex

There are two main types of financial news: hard news and soft news. The hard news category includes simple facts and figures from economic benchmarks such as retail sales; corporate legal case reporting; major new product releases; disturbing geopolitical events; and financial results reported by public companies.

Soft news category includes opinion; job interview; Comment; Speculation; company page; profile of business personality; and product performance reviews.

Can you guess which category traders and investors should join next? Read on and see the answer in the conclusion.

Bad news trading forex

The hard message in MetaTrader 5 looks like this:

These are releases of economic benchmarks that provide traders with important information about supply and demand, helping them set expectations about price levels for various commodities, for example.

Other types of hard news include earnings reports, significant new orders, resignations or hiring of top company officials, and reactions to geopolitical events.

It is easier to see the relationship between hard news and market reaction because the news is directly based on the actual instrument.

Soft news

Soft news is based less on facts and figures and more on opinion, human interests, and speculation. This type of news blurs the line between entertainment and information, trying to touch emotion. It is more difficult to link soft news articles directly to trading and investing, the topic can be several degrees from financial instruments.

Critical analysis versus just receiving news

It is an easy mistake to just accept what you read on the news, after all it is the written word, something we are all taught from a young age. Applying critical filters is important because what you read can affect how you trade or invest. One way to analyze news is to ask whether it is hard or soft and how important it is to market reaction. Another way is to compare the same news from different sources.

Quality and sourcing trust

Sources are not all the same, some are more reliable than others. Check the source for quality, longevity, experience and bias, yes, news sources have their own biases too.

fact verification

Fact checks are relatively accessible online in terms of hard news, as these articles are based on announcements from public services such as government statistical agencies.

For example, when the US government releases its latest GDP growth figures, it posts a statement on the Bureau of Economic Analysis (BEA) website. Double-checking the facts can help you get an idea of ​​whether the source is trustworthy or not.