Trading CFDs involves a significant risk of loss that may not be suitable for all investors. Please ensure you fully understand the risks and take appropriate care to manage your exposure.
For more information please read our Risk Disclosure

Trading CFDs involves a significant risk of loss that may not be suitable for all investors. Please ensure you fully understand the risks and take appropriate care to manage your exposure.

How Market Noise Affects Trading

In the stock markets or even the Currency markets there are a lot of factors that influence the direction of prices and the market in general other than fundamental data. This could include among other things data analysis reports and ideas that are inaccurate. Hype also counts as market noise. This noise is omnipresent not just in the markets but in the wider economy and is an indicator of inefficiencies in the market. And, as you would expect in what has been dubbed the information age, noise is rising at an exponential rate while the information that would be considered useful is not. With regards to the equities market, noise exists where the activity of buying and selling of equities is being motivated by such things as payment of dividends which might motivate some to buy in order to cash in on the dividends while others use the increased demand to sell at a high. Noise has also been in existence when trading is being done using computer programs. Unfortunately, for market participants, it is not always easy to distinguish between accurate information and noise. It has generally been observed that when looking at trading charts, the likelihood of being unable to separate noise from meaningful and significant market movements reduces as the time frames get shorter. Not all market participants are averse to market noise, though. Some seize the opportunities that market noise presents by engaging in speculative trading.

Speculative trading

This article is available only to alvexo plus members, register now, and get 7 days of free membership.

Don’t have an account? Sign up

Please insert full name
Invalid email
Please insert valid password

I hereby agree to the privacy policy and to be contacted and receive Alvexo marketing emails, SMS or phone calls. as well as open a free trading account on the alvexo platform

Already have an account? Log in

+

The Alvexo website and applications use several types of Cookies, which are classified as: session, analytical, functional, Google analytics and third-party cookies. These cookies enable us to deliver personalised ads, gather statistics and improve our services and user experience.

Manage
Accept