One of the most underrated, but most valuable pieces of research you can do is to actually read central bank statements. Now, we know the temptation to go with the bullet points. You come to your desk and you see the latest central bank minutes with a few lines of analysis. Job done. Not so fast speedy Gonzalez! By not reading over the central bank statement you are missing out on some significant benefits.
Benefits of reading central bank statements yourself
- If you are a new trader the fastest way to zoom in on the global outlook is to read central bank statements. Central banks are acutely aware of global financial activity. They will often give you a potted summary of what is going on around the globe. The major concerns, worries, etc. Central banks want to maintain a stable monetary policy for their nations, so they have to be well up on the global picture.
- See an emphasis the bullet points miss. Sometimes the bullet point summary will miss an important point buried within the statement. It can be a point that wasn’t relevant at the time the bullet points were made but can become relevant at a later date. If you have read the whole of the statement you are better placed to pick that up.
- Bullet points don’t show the context. Take this example – ‘Mr. Smith is the best author I have ever read’. Sounds fine, right? But let’s look more closely at the context – ‘Mr. Smith is the best author I have ever read. Of course, he is the only one I have ever read!’ So, you get the point. The bullet points will often misconstrue the context. These slight shifts add up. In some cases, they can nullify the meaning.
- Finally, by reading the whole statement, the information goes into your subconscious and this will help your ‘gut feel’. The part of you that you access subconsciously that is essentially an edge over time once it is developed.