This article looks at the forex news and technical analysts that you can find.
Many traders state that in order to be successful you have to be willing to listen to what other people think about the market. The people they are generally referring to are market analysts. However, when you look at the forex news that these analysts provide you have to consider whether or not they are biased. There are three different types of analysts that you have to be aware of and you need to know what can affect the forex news that they provide.
The Different Market Analysts
There are three market analyst types that you have to be aware of. The forex news that they provide will be affected by the type of analyst they are:
- The buy side analyst will work for the heavy hitters of the forex market. Banks, hedge funds and large corporations will hire these analysts to determine how they should trade on the market. You may be able to find their information if you are also affiliated with the heavy hitter that they work for.
- The independent analyst will often sell the forex news that they have to subscribers. These analysts are not affiliated with anyone which often makes their information less biased.
- The sell side analyst is the one that you most commonly come across. These analysts work with brokers and other financial companies. The information that they have regarding the market is usually provided to trader using the brokerage company they are affiliated with.
The Forex News Bias
Many people wonder about how biased the information these analysts provide is. The truth is that all information from any analyst can be biased. If the analyst prefers to trade with a certain currency pair then they are going to analyse the market for this pair. This can often lead to the analyst telling you to trade with one currency pair instead of another.
When the analyst is affiliated with certain companies then you could also find a bias which works in the companies favour. If the hedge fund is looking to trade on an uptrend for a certain currency pair the market analyst may tell other traders to do the same. This will create a movement in the market and carry the momentum of the trade so the hedge fund can make the greatest amounts of profit.
Is it Good to Use an Analyst?
The fact that analysts can be biased makes many traders wary of using them. If you are going to use an analyst the key is to not trade solely on their information. A lot of traders look at analyst information as a directional tool. This means that they take the information they are given as an indicator of where to look on the market. Of course, when you do this you have to stay away from confirmation biases where you only look for information that confirms the analyst information.
It is important that you complete your own analysis of the market based on what the analyst has said. If the analyst states that you should look at trading a certain currency pair because it will move in an uptrend you have to confirm this. Looking at technical and fundamental data ensure that you only trade on good advice.