Financial News Sites Are Mostly Drama And B.S.

A few years ago I was browsing the various news sites, and caught wind of the military escalation in Ukraine.

Reportedly, about 1,000 Russian troops have now crossed the Ukrainian border.

Unsurprisingly, a number of news reporters jumped on this story and tried to relate it to how financial markets are moving.

Here are some of the headlines I’ve read so far:

Yen firms on Ukraine tensions
(Reuters: Aug 28, 2014 7:30pm EDT)

Yen Gains on Haven Bid Amid Ukraine Tension
(Bloomberg: Aug 29, 2014 5:08 AM GMT+0800)

Yen Heads for Weekly Gain as Ukraine Tensions Spur Haven Demand
(Bloomberg: Aug 29, 2014 8:05 AM GMT+0800)

The common theme here is the strengthening of safe haven currencies (like the Yen) upon the bad news.

This looks serious!

So I opened up my Yen charts and took a look.

Here’s what I saw:

 

Hmm… Okaaay…

If I didn’t know better, I’d be more than a little confused.

Looking at these charts, even 9-year old child would be able to tell that the reported “strengthening” of the Yen is likely to be nothing more than a blip of market randomness.

What’s the significance of such a small move?

The answer is nothing. There’s practically no significance to it at all.

But of course, a financial reporter’s job these days is not so much about filtering information than it is to sell subscriptions.

And they do it by making up compelling stories that try to relate real-world events to market prices, even when the relationship between the two are weak at best.

In the Icarus project, this is an issue we discuss at length. Inside, we show proof of how a reputable financial newspaper tried to explain why EUR/USD prices moved up and down, by giving the same reason!

Clearly, these news outlets either have no idea what they’re talking about, or don’t care about the quality of the news they report.

As traders, we would do well to remember this.

Different Incentives

Reporters and analysts are paid by the number of articles they produce (and their popularity). Often, they do this by writing reports that seem to make sense, regardless of whether they actually do or not.

Thus, such news is irrelevant to serious traders.

Unlike the armchair speculators who make a living coming up with entertaining stories (often by “explaining” things that already happened), real traders make money based on facts.

If we are wrong about reality, we lose money. It’s as simple as that.

Our incentive is thus to understand reality as accurately as we can. Trading based on entertaining illusions is bad for the bottom line.

This is why we must never take anything we read or hear seriously without verification.

There are plenty of people out there who will tell (sell) us thrilling stories about the market, but that have no bearing in reality.

Is This Something You’ve Noticed Too?

What do you think? Have you ever experienced something like this before?

Let me know your thoughts in the comments below!

By |2019-03-10T07:00:45+00:00March 9th, 2019|General|10 Comments

10 Comments

  1. brian August 29, 2014 at 7:16 am - Reply

    the only thing we can know about price movement is that it will go up
    or it will go down but not necessarily in that order

  2. Neil August 29, 2014 at 7:23 am - Reply

    Be fair Chris 🙂 – it was a false headline cleared about 4 mins after it was made – confirmed that it was only a convoy……………..price retraced to previous positions

    • Chris August 29, 2014 at 7:58 am - Reply

      Hmm… isn’t that an even stronger reason to be wary of the news media?

      • Robert August 29, 2014 at 2:04 pm - Reply

        Excellent question Chris! That’s why I use the “Fundamentals” very cautiously! So many in the media “create” news instead of report it!

        • Chris August 30, 2014 at 3:11 am - Reply

          Hi Robert,

          Yes, most of the time there really isn’t any real news at all.

  3. Neil August 29, 2014 at 7:30 am - Reply

    Well well well – just checked on my second provider and my candles are the same on both but not the same on yours!!! Very strange Chris!!!!

    • Chris August 29, 2014 at 8:02 am - Reply

      Hi Neil,

      That could be the result of the different timezones our brokers are located in.

      When your broker determines the “start of the day” (for the daily candle) might be different from mine.

  4. paul August 29, 2014 at 9:45 am - Reply

    The truth is that we candlestick traders don’t rely on NEWS.The candlesticks would show you direction.As you said earlier,Chris,we know better. Thanks a lot Chris for your candid contribution to mankind.

  5. Alex November 25, 2014 at 5:14 pm - Reply

    I am a newbie and really want to know how to trade the candle, but where ever I turn to it is money that I can not afford. In this part of the world $10 dollars is something that can take us up totwo weeks to get. So how can you help someone like me.

    • Chris November 27, 2014 at 6:38 am - Reply

      Hi Alex,

      If $10 is problem, I would humbly suggest that you don’t look to trading for your income needs.

      For better or worse, this is an endeavor that should only be pursued by those with capital that they can afford to lose.

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