Making Sense of the Media and the Market While Trading

The media's take on the market and current financial climates and trends can be highly sensationalized. There are plenty of news stations out there that fall a bit short on the unbiased reporting agenda. In fact, almost all the news stations end up inflicting their opinions or the opinions of the reporter onto the country. However, there is still some good information in there, so how do you go about shuffling through the deck to find your one ace of diamonds?

Learning to read the media is a long process. There is a wealth of information that the media can provide, but you have to start with the basics. The first and most vital of these basics is learning to find the new source that is the least biased. Just because it says it is unbiased doesn't necessarily make it true. Listen to the same report given by several different news sources and pick out words such as "should" and "ought to" as well as any personal opinions of the media reporter that are given. Sometimes this is easier to do with print media first followed by television and radio.

The second step is wading through all the information that is given. Some of it is worthy and some of it really isn't. Your own bias will play a part in how you interpret the information you receive. When you refer to stocks you often place a label on them in your mind such as "worthless" or "hot," indicating that you have a preconceived idea about their potential for performance. This is natural and normal. If the media disagrees with your own bias, you often tend to tune it out, skip over it, or dramatize it in your own mind and allow the conflict of bias to indicate your next action.

Remember that the media doesn't have all the answers. It may have some, but their sources are also biased. Even the most accurate source generally has a feeling about it and relays that either intentionally or unintentionally. For instance the world of energy costs creates dissention among citizens with the mere mention of how much it costs to fill your tank these days. People are unhappy about heating their homes and driving die to these costs. Regardless of their impact or lack of impact on the market, people are already biased and often assume that this particular misery in their life will have a strong impact on today's stocks. Sometimes it does and sometimes it doesn't.

When you hear information revealed by the media you are also hearing what you are intended to know. There are always "behind the scenes" happenings that the public is never made aware of, simply because the knowledge isn't believed to do us any good. While we may agree or disagree about the necessity of this belief, you always have to temper your own judgments with how much information you might not have at the moment of decision.

Simply by becoming aware of the amount of bias that happens in reporting and listening to the media you can learn how to take the majority of bias out of decision making. There will always be some because we are all biased in the sense of knowing what is really best for ourselves but often we fail to see the complete picture. Recognizing bias helps you take it out of the picture and make more informed decisions that could very well uncover your ace of diamonds.