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.