Title: Noise
Headings: Noise
Noise
What Is Noise?
Key Takeaways
Understanding Noise
Noise and Time Frames
Causes of Noise
Having a System: The Alternative to Noise Trading

Content: It's also advisable to be on the lookout for artificial bubbles, which are often created when many noise traders congregate their purchases around a single company or industry. Market noise can also lead to corrections or reverse movements of more than ten percent of the value of a security. These corrections are typically adjustments to a significant overvaluation of a security or index. Having a System: The Alternative to Noise Trading
Many traders create processes and rules for making trading decisions to help avoid noise. These traders establish preset risk and reward parameters, meaning they know how much they're willing to risk on a trade as well as when to take profit or unwind the position. With a trading plan, investors attempt, with some precision, to determine what would constitute a profitable move in their current position. Typically, investors who do not have a trading process for arriving at a decision are more susceptible to noise trading. Of course, making decisions based on a personal trading strategy doesn't remove susceptibility to misinformation. However, traders who know what they're looking for are far less likely to be swayed by noise than traders who rely on news or other fluctuations.