What do you think about people who go to a fortune teller. Probably that they are stupid or naïve. But do you know that people go to a fortune teller and read market commentaries because of the same reason?
Before I will get into details I want to say that in this post I discuss only commentaries which explain PAST market movements.
Why do people go to a fortune teller? Because they are confused about their life and they need someone smarter to explain it and tell them what to do.
Why do people read market commentaries? Because they are confused about their trading or investing and they need someone smarter who will explain them past market movement and tell what to do.
Does a fortune teller know the future. No.
Do market commentators know why a market went up or down? No.
If a market is big and liquid (like EUR/USD) then there are so many investors and traders on this market that nobody knows why they buy or sell. It is also very hard to manipulate such a big market. And even if someone is rich enough to do it then he or she will not tell about it to anyone, even the most famous market commentator.
So market commentators have problem. People want them to explain why a market went up or down. But they have no idea why it has happened. So they find some explanation which looks smart but usually isn’t true.
Do I read any PAST market commentaries. Usually not. I can do it only to check if I have included all essential data in my trading decisions. For example if I trade supply and demand zones then I may read other traders’ posts to check if I didn’t overlook any zone.
In other situations don’t waste your time on reading market commentaries. Spend time with your family, take a walk or drink a beer. It will be much more effective.