While it’s a fact that markets can be driven by speculation, not all speculation is based on facts.
Hypothesis makes up a significant part of trading news. This can range from speculation based solely on rumours to theories based on analysis and experience.
News stemming from the Federal Reserve’s monetary policy statements and speeches is a good example. The central bank’s interest rate decisions aren’t published until the day of the policy meeting. That doesn’t stop Fed watchers generating an enormous number of articles, trades, investments, analysis and opinions before and after the meeting.
It’s important to be aware that these might influence your own decision making and if you follow trading news, to find the most reliable sources of information.
Large institutions like banks and hedge funds make market-moving trades and investments based on their research into the Fed’s next move. Once again, these decisions could prove to be right or wrong, and they won’t be confirmed until the day the interest rate decision is announced. While the analysis might be accurate, it is possible for decisions made based upon extensive experience to miss the mark.
Market talk can be wild speculation or logical assumptions by the experienced…