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Filtering Noise from Trading


Filter out the noise

The signal is the truth. The noise is what distracts us from the truth. – Nate Silver.

 
As a trader, you are dealing with two types of information, signals and noise. Signals are meaningful pieces of information that cause traders to take action when the odds are in their favor. Signals are things that traders look for; technical buy signals, sell signals, or psychological signals like the market going up on bad news or down on good news, for example.


The noise is all the price action, news, predictions, opinions, projections, and forecasts that add no value to your trading. Your ability to filter out the unnecessary and focus on the important things is what will keep you calm while other traders are suffering a psychological downtrend.


You have to identify what type of information is meaningful to you. What are your signals? If your trading is only done at the end of the day, then intra-day price action may just be noise for you. Talking heads on financial news networks are just noise for everyone. You should identify exactly what time frame of price data and technical signals you need in order to make your trading decisions, and then focus like a laser on only those things. Avoid anything that doesn’t add value to your trading system.


Too much data, tick by tick price action, news, and fear mongers can stress a trader out with information overload. Too much information will lead to a paralysis by over analysis for many, especially new traders. In the financial markets, many pundits and financial networks love to find interesting facts about the current market price action in a historical context. While these factoids may be interesting, they can’t be used to create trading signals. They are just fun facts and noise. More information is not what is useful, rather it’s the mining and filtering of what has value that makes the difference.Thats waht i teach my students filerting eachand telling them how to trade less trade better and hoping for them to get better with time at this. you can also join with just a whatsapp message at 9773770675 and registering . 

The more you can focus on what matters and avoid noise, confusion, and stress, the better your odds of staying calm and becoming a profitable trader.

Exercise : 

It can be difficult to filter out the noise. Here are some questions to ask yourself to help you separate meaningless information from important facts.

 

-Does this financial news network add any value to my trading?

-Am I better off watching every price tick all day, or should I set alerts when my price targets are reached?

-If I am a day trader, should I only trade the open and closing hours instead of taking part all day?

-If I use end of day signals should I watch intra-day price action?

-Which people on social media add value to my trading and which add unnecessary noise?@wisemantrading  |  (personal) @chander_2685

-The only thing that should matter to you as a trader is actionable information, signal creation, and what has the potential to make you money. Find out what makes you money and focus on that stream of information.

Your time, money, and energy are your most important assets, spend them wisely.
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