Noise Trading: Why You Continue to Lose in the Era of High Technology

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Gone are the days when you would overstretch your nerves to trade in financial commodities. Today, you don’t have to strain your eyes on a screen while trying to predict price flow. Better yet, you no longer have spend days or weeks collecting or manually determine commodity volatility.

Thanks to technological advancements, you can buy, monitor, and sell a commodity at a click of a button.

Sadly, most traders (noise traders) continue to reap huge losses. Are you one of these traders? You may not be sure. This article will inform of the traits of noise traders. Finally, you will learn how to reverse your lose journey to a fruitful adventure. Let’s dive right in.

You Strive to Process too much Information at a Time

There is an ocean of information on successful commodity trading. First, you need the wisdom to collect preliminaries be starting to trade. Next, you need empowerment to handle a portfolio.

Here, you aim to grab skills to enable you to manage risks and turn them into dollars. Finally, you will need to sell some commodities, thereby earning massively from the venture. However, there is a catch:

Overstretching your brain to grab excess knowledge will make you lose from commodity trading, instead.

You over Multi-task

Multi-tasking may take several forms. You don’t complete a critical investment stage before transitioning into the next. For example, monitoring price change while completing a purchase.

Here, there is a danger of missing critical details of one of the activities. The aftermath would be financially harmful to your portfolio.

You Rely on Assumptions

Market corrections sometimes lead to the unpredictability of price trends. Consequently, some traders tend to fully listen to their gut when making financial decisions, instead of relying on technical analysis. Alternatively, you listen to what other trends predict the price trends.

Trading this way is likely to expose you to petty financial mistakes, which you would easily avoid in this era of technology.

You Are Over-emotional with Portfolio Decisions

You will gain today, and tremendous lose the value of your portfolio tomorrow. This is normal in a speculative venture. However, here is the fall:

Let’s say forex prices jump to the green mark. You will be happy, won’t you? This upward trend continues for three days.

Being the jovial trader, you decide to over-invest in this commodity. Then, alas! The prices suddenly fall twice your buying price.

You are optimistic about the turn of events soon. However, the downward trend insists even five days later! You are furious. You sell all your commodities. Suddenly, the prices on the seventh day to twice surpass your buying price!

You regret but can’t undo the premature selling! That’s the power of emotional trading; you garner losses while well-calculated traders reap hugely.

Remedy?

Here’s how you should avoid noise trading:

Be Simple and Logical

Grab the basics of trading in commodities. Although it is not always harmful to listen to fellow investors, make your investment decisions after careful examination of the market trend.

Don’t complicate the process by using the software you don’t understand how to use. Better still, don’t let small market ups and downwards push you in making emotional and irrational decisions.

Be Skillful

Learn. Like any investment avenue, there are going to be new technologies. Therefore, keep refreshing your knowledge even after developing trading skills.

Strive to Apply Noise-removal Techniques

Use the latest technology to enable you to make better trading decisions. For example, employ the Zig Zag Indicator to monitor highs and lows.

Conclusion

Artificial Intelligence and related technologies have injected ease in commodity trading. However, automation is not a guarantee of success. Making premature trading decisions is likely to result in giant losses.

To win from commodity trading, learn the necessary trading skills and apply simplicity and logic in managing the portfolio.

You can read more here:

https://www.investopedia.com/investing/commodities-trading-overview/

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