Noise refers to price and volume fluctuations resulting from events unrelated to the prevailing market sentiment. Market noise can confuse traders who are looking for trends and patterns. Market noise may be the result of program trading, bad information or other misleading phenomena.
It is difficult to separate noise from meaningful market movements. It is even harder when you are dealing with a short time-frame like traders do. Some traders have given up on separating noise from true market movements and have become noise traders, rapidly trading within the bands formed by market noise. For other traders, however, market noise is often a sign to step back and watch until an actual trend emerges.
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