news broadcastIf you are interested in binary options trading and fundamental analysis, you may be planning on trading based off of news and events. It is very common for new traders to make decisions based on things like intuition—or the advice or intuition of others. A lot of traders watch the economic news each night. Maybe you even started doing that long before you took an interest in binary options trading. Should you actually listen to CNBC or Bloomberg, though? Or should you make your own trading decisions?

This is such a common influence on beginning traders that it seems worth addressing briefly. Analysts on these news services are (or are supposed to be) financial experts. Surely if they say something, you should believe it, right? If a Bloomberg analyst says the trend is going up, why wouldn’t you listen?

There are at least several different reasons I can come up with off the top of my head that you should approach these analytical commentaries with caution, or ignore them outright.

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1. Not every financial expert on the news is really an expert.

It is sad to say, but you cannot simply accept the credentials of some reporter on CNBC simply because he is employed by a major reporting agency to appear on TV and talk finance. Why not? There are often secondary political motivations behind journalistic shows, including financial programming. So no, not every person who gets up on TV and talks about the stock market or the price of a currency or commodity is going to be an expert. And moreover, even if he is, that does not mean he does not have secondary political motivations. Financial statements are often made in a leading way—they are intended not just to reflect a possible trend, but also to help produce one. Why would you want your trading to be influenced by such messy motivations?

You may eventually discover some experts are more reliable than others, but you should initially approach them all with caution, and consider what other reasons they may have for making a particular statement.

2. These experts have no clue how you trade.

The advice you hear from financial experts on television may be very nonspecific, or at least nonspecific to you. Does the guy on television know what trading system you use? What time frames you follow? What expiry times you work with on your trading platform? Your rules for entering or exiting a trade? Has he tested your method out?

The answer to all of these questions is “no.” Of course not. The commenter on television has no idea whether the advice he is giving would be helpful to you given your system, even if it would be helpful to someone else with a different system. You might decide that it is useful, but again, this is another reason to exercise caution. Even if the analyst is right about some trend, that does not mean you should be trading it. If you are trading short-term trends, information about a long-term trend may have limited value to you. You might skip out of a perfectly good trade because you are ignoring the fact that the information the analyst is presenting does not negate your trade.

3. There is a temptation to rely on “expert” advice.

These experts are not you, and they cannot do your trading for you. It can be very tempting to rely on them for their insights, and start replacing your own. But nobody else can think or act for you, at least not for long. You may have good results now and again when your rely on someone else, but not for long or consistently. And when things go wrong, you will feel completely helpless, because you have not taken the steps toward becoming an expert yourself.

And that is the bottom line here, and the best piece of advice I can give you. If you want to do really well trading binary options, you may be able to make some use of expert advice from others, but there is nothing in the world that works better than becoming an expert yourself. Once you really learn how to trade, based on your own skills and testing, you will feel much more confident relying on yourself. You will also have the perspective you need to intelligently and responsibly apply the advice of financial analysts on TV when it serves you. You will also know when it is best to ignore the commentary and press on using your own knowledge and insights.

Read these articles to become an expert yourself: