How does the news make you lose money?

I want to share a personal story to illustrate the problem and why I believe reading the news is a bad idea for traders

One morning a while ago I was waiting at the bus stop for the school bus to pick up my kids and one of the other fathers came down. The first thing he said to me (with a concerned look on his face) was “are you out of the market already?”

He looked concerned

Stock trading psychology │reading news is bad for your trading

Reading the news is bad for your trading profits!

“Why?” I asked

“The markets are getting hammered because of this Brexit thing…it’s bad”

“How bad?”

“Really bad”

“Ok – I haven’t seen the news, I’ll have a look”…

I won’t bore you with the rest of the conversation, but needless to say that conversation got my stress levels up a bit. I don’t look at the news and I had visions of a big correction and red all over the big board.

So anyway I had that little bit of stress before I logged into my account. When I got back to my computer and opened my trading platform (Interactive Brokers – Since you asked) and guess what I found?

My account was up!

Not only that but the border market had only declined by around 0.3%

Hardly a “crash” or “panic” or “plunge” as the news article was saying!

The moral of the story?

The news is there to shock you, grab your attention and make you look at the paper / website long enough to see their advertising… It is NOT designed to inform you to help you make good trading decisions.

This is why building your own stock trading system is so critical to your success – it eliminates most of the emotion because you can turn off the news and just follow the rules!

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