Weed out Market Noise

Market noise bombards anyone paying attention to the stock market at all. These are useless facts about what is going on with the country, how the economy is improving/ getting worse, how inflation rates are changing, what the unemployment rate is doing. Theses attempt to explain why a particular stock, sector, or economy did what it did.

It is difficult to find out which information is useful and which information is just a waste of time. As a general rule I believe 90% of all information talked about in the stock market is complete and utterly useless, at least when it comes to making money. You cannot decide what to buy and what to sell based on how much the fed will cut interest rates, or what the media says.

Your success as a trader will partly be decided by your ability of weeding out useless market noise. In fact ignoring all irrelevant facts about what is happening in the market will help you to be a better trader in the long run.

So what do you rely on? Simple your system, that’s it, simple enough. Everyone who ever has, is, or will make consistent money in the stock market has done so by following their own system of trading or investing, that’s a fact.

Weather your system is trading short term breakouts, or buying a group of strong companies and holding onto it for the long term, you need to have a plan before you make a move.

It’s a shame that most traders will allow all of the market noise to get the best of them and break their own rules. It happens to everyone, you will buy a stock because it looks like a good buy according to your rules, but then bad news comes out and you start thinking, “Oh no, that sounds really, really bad I better sell everything I own because the markets going to crash”.

You sell only to see your stock rally after you sell it. Following your rules would have helped you out here. There are 3 things you need to do in order to be successful in the market.

1. Develop your goal for the stock market. Investing without goals is like buying a lottery ticket, you don’t know what will happen but you hope everything will turn out for the best. You must have some idea where you are going, that can help you take the right course.

2. Develop a system and follow it, EVERYONE who makes money in the market follows this step. Yet it is the most overlooked step in the market. You can’t consistently make money in the market unless you are consistently doing the same thing in the stock market.

Think about it, everything you do you do consistently. You don’t wake up one day and decide you are going to brush your teeth with the plastic side of the tooth brush today. Then why change your trading strategy every day, week, or trade.

3. Weed out market noise, who cares what some random on CNN guy with a degree in economics says about the stock market. There is no college degree that will turn you into a stock market trader.

Follow these goals and you are on your way to making money in the markets.

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