One of the biggest challenges everyone faces now is information overload: we’re constantly bombarded by information. Europe is on the brink, the market’s tanking, Mr Gloom thinks this, Mrs Boom thinks that.
It’s becoming a major issue.
Information, of course, is potential power: it can be used for good or to profit. But the problem now is the sheer volume thrown at us. The market, with constant noise and movement and opinion, is particularly bad.
The constant flow of information draws use closer and closer to the market until we’re completely beholden to it. Before you we know it, our emotions rise and fall with each market rise or fall. We totally lose perspective on what’s happening.
Talking to traders, that’s exactly what happened in 2011: everyone became so obsessed with a bit of volatility and economic doom that they totally forgot it wasn’t a really disastrous year; and that the US market’s are still probably in a bull market.
So what to do? ‘
Here are a few things to help cut information overload:
1. Focus on what is happening, not what might happen
Ignore constant predictions about what might happen, which can cause panic and confusion, and focus on what is happening right now. That is the best clue to the future. For aggressive growth investors, are bullish chart patterns developing? What companies are generating accelerating sales and earnings? What companies are developing innovative new products? When it comes to the broader market, are there signs of accumulation? Is the market in an uptrend or down trend? Are new highs bigger than new lows? Look at the facts now, and stop worrying about the future, which you can’t predict.
2. Look at the bigger picture
As I said, the market draws us in. Practice drawing yourself back out. Look at long-term charts: weekly and monthly. Look at the big picture: is the market actually in a bull market, but just undergoing a correction? Or are we in a long-term downtrend?
3. Turn off the computer and other devices.
Mobile devices are handy, but a nightmare when it comes to information overload. Turn them off, at least, over the weekend, or just check them once or twice. Most people are addicted and it will be difficult. The urge to turn them back on is overwhelming, but try and ride the urges and it will get better. The reward is a clearer head on Monday morning.
During the week turn off every device after work. That includes mobiles, ipads, and computers. Give your brain a rest from the bombardment.
3. Ditch any non-essential information services, newsletters, blogs, etc.
Perform an audit on information you receive: does it actually add value? Does it actually help you make money? Does it contribute directly either to learning new strategies to make money, or directly to trading decisions? If the answer is no, ditch it.
4. Start reading printed products again.
Everything has gone digital. But to help your brain slow down and contemplate start reading printed products and magazines again. I’ve found sitting down and reading The Economist magazine, for example, gives me a fresh perspective on events, particularly big-picture trends; but being printed it’s not delivered in that frazzling, digital blur.
5. Print things out.
Rather than read everything online, which tires out your brain and contributes to overload, print articles and information out and sit somewhere quiet and read it. Again, it’s a slower more contemplative way to absorb information.