Chef Tomislav Blogs

Simply, anchoring is the cognitive bias that makes us focus on a particular event or information in making our decision. Online forex traders are somewhat guilty of this attitude. The reports from Central Banks, the Federal Reserve in the United States, the International Monetary Fund, and the World Bank are taken too seriously as if there are no other factors to consider. Investors react immediately on the news that there is an impending interest cuts. Many immediately assume that the cuts were done to reverse an impending inflation or to boost borrower confidence, but the reason maybe a simple political decision to appease critics of the government.
This rapid-fire approach in decision-making has been catastrophic for many foreign exchange investors. They immediately assume that a positive news yields to higher currency rate, but recall that not all positive news give positive results in the stock markets and the finance sectors. While policy makers say that sending more aid to Afghanistan and Africa will show positive numbers in the US currency and the US stock markets, there are some sectors of the American press that are warning of the dangers of overspending and their negative effects on the American dollar and the economy. News and information can trigger a temporary anchoring attitude on the part of the investor, but he must be extra careful not to focus too much on one data because this might lead to dissipation of his wealth.

Online forex trading involves a lot of risks. Anchoring would simply make things worse. Recall that some information released by news networks and the major channels are exaggerations and written by journalists. There are much good information in the university blogs and personal websites of economists. Utilize them to help you in your decision-making.