How to Trade Forex News: An Introduction  

0
326
forex news trader looking at screen

Important economic data can drastically move the forex market. It is this movement, or volatility, that is looking for newest traders learning how to trade forex news. This article deals with the main news, wwhen they occur, and presents the various ways traders can exchange the news.

Why Trade the News on Forex?

Traders are attracted to new trading trades for different reasons, but the biggest reason is volatile. Simply put, forex traders are attractive news by their ability to move forex markets. ‘News’ refers to publications on economic data such as MEP and inflation, and forex traders tend to tian monitors editions considered “high importance”.

The biggest moves tend to follow a “surprise” in the data – where the actual data contrasts with what the market expected – The good news here is that you don’t have to do a PhD in Economics because it’s ours economic calendar already provides economist expectations.

Furthermore, news items are set at predetermined dates and times, allowing traders enough time to prepare a solid strategy.

Merchants which can effectively manage the risks of volatility, in the predetermined time of the news release, is on its way to becoming consistent merchants.

The Impact of Major News on the Forex market

Before a major news release, it is common to see lower trading volumes, less liquidity andhigher spreads, often resulting in large price jumps. This is becauselarge liquidity providers, similar to retailers, are unaware of the outcome of news prior to its release and aim to offset some of this risk by widening spreads.

While large price movements can excite business important news, it can also be risky. Because of the lack of liquidity, retailers could experience irregular pricing. Such inconsistent pricing can cause a huge price to go up stop losing blinking, resulting slip.

Additionally, the wider spread could put traders on a margin call if there is not enough free margin to accommodate this. These realities around major press releases could result in a short business career if not properly managed through prudent money management such as assimilating stop losses or guaranteed stop losses (if available).

In in general, major currency pairs will have lower spread rates than the less traded ones emerging market currencies and small currency pairs. Therefore, traders may seek to trade the largest EUR / USD, USD / JPY, GBP / USD, AUD / USD and USD / CAD to name a few.

General forex is spreading among major and emerging markets

Traders need to be well prepared in advance – with a clear idea of ​​what events they want to trade and when they are happening. It is also important to have a solid business plan men place.

“Don’t think about what the market will do; you have no control over that. Think about what you will do if it gets there. Especially you have to spend no time thinking about those pink scenes in which the market is going your way, because in those situations, there is nothing more you can do. Focus instead on those things that you least want to happen and what your response will be. “- William Eckhardt

What Important Forex News Do You Trade?

Learning how to trade news, traders should be aware of the main news that affects the forex market, which can be closely monitored by an economic calendar.

U.S. economic data is so influential in global currency markets that it is generally considered the most important news. It is important to note that not all press releases lead to increased volatility. Rather, there is a limited number of major news stories that have previously produced the greatest potential to move the market.

The table below summarizes the most important economic editions of the United States along with some of the most important non-US data releases from around the world.

Major news (United States and the rest of the world):

Edition of economic data

Time (EST)

Description

Non-farm payrolls (NFP)

8:30 am – monthly edition (first Friday after the month ends)

Represents the net changes in employment jobs

United States Gross Domestic Product (GDP)

8:30 am – quarterly edition

Measures the monetary value of all goods and services produced in the United States over a defined period

US Federal Reserve Bank Federal current exchange rate

13:00 – scheduled 8 times a year

Interest rate at which depository institutions lend and lend to other institutions, suddenly

Australian exchange rate

22:30 (First Tuesday of the month except January)

Interest rate charged on sudden loans between financial intermediaries

Australian employment change

19:30 – monthly edition (about 15 days after month ends)

Change in number of employees during the previous month

European Central Bank refinanced

7:45 am – 8 times a year

Interest rate on the main refinancing operations offering liquidity to the financial system

Bank of England official bank rate

7:00 am – monthly release

Interest rate that the BOE lends to financial institutions (overnight)

Bank Canada overnight rate

10:00 am – 8 times a year

Sudden speed that major financial institutions lend and lend to each other

Canadian employment change

8:30 am – monthly (about 8 days after month ends)

Measures the change in the number of employees in the previous month

Official Reserve Bank of New Zealand exchange rate

21:00 – scheduled 7 times a year

Interest rate at which banks lend and lend to other banks, suddenly

Key Tools and Resources for Trading Forex News

DailyFX provides a single for all your forex related data and news:

  • Economic calendar: Know when important data like the U.S. non-farm payrolls, GDP, ISM, PPI, and CPI need to be released.
  • Central Bank Calendar: Interesting decisions by the Central Bank can have a profound impact on the financial markets. Find out when they are scheduled.
  • News flow: Stay up to date on the latest news, as it happens, with updates from our top analysts. Similarly, get all the main stories of the day plus analysis following our market news.

Risk management when trading news and events

The importance of prudence risk management approxnot to be exaggerated during unstable periods following news.

The use of for is highly recommended but in this case, retailers may consider using guaranteed stops (where available) over normal stops. Warranty stops come with payment, so be sure to check this with your broker; however this fee can often be insignificant in relation to the amount of slip that can occur in such unstable periods.

Additionally, retailers also need to lookreduce their normal business size. Volatile markets may be a trader’s best friend, but can also reduce account equity significantly if they remain unmanaged. Therefore, in addition to putting guaranteed stops, traders can look to reduce their trading sizes to manage the emotions of trading.

3 Approaches to forex news trading

There are many approaches that traders can adopt while developing a forex news strategy that depends on the timing of the trade in relation to the news.

Many marketers like to trade in the moment and make decisions when and when an ad happens – using an economic calendar to plan ahead. Others prefer to enter the market in less unstable conditions before a release or announcement. To summarize, forex news trading falls into one of the following categories:

  1. Trading before the press release
  2. Trading at the press release
  3. Trading after the press release

1. Trading before the press release

Forex trading news before the release is useful for traders who want to enter the market in less unstable conditions. In general, traders who are more at risk gravitate towards this approach, seeking to capitalize on the quieter periods before the press release trading ranges or simply trading with the trend. Discover strategies on how trade before the news release.

2. Trading during publishing

These forex news trading strategies are not for the faint of heart as it involves entering a trade while the news is breaking or in the immediate moments. This is at a time when the market is most volatile, which underscores the importance of having a clear strategy and well-defined risk management. Efool yourself with strategies for navigating the volatile associatedd with forex news trading at the release.

  

3. Trading after the press release

Trading post-release involves entering the business after the market has had some time to digest the news. Often the market, through price action, gives indications of its future direction – giving traders a great opportunity.Learn how to trade the news as the market crosses with our article on trading after the press release.

Top 3 memorable things when trading news

  1. Preparation is key: Don’t be tempted to suddenly exchange the news with the fast-paced offer and ask for prices on the screen. Be disciplined enough to leave, re-evaluate, and develop a strategy to be implemented in a timely manner for the next major news release.
  2. Wider spreads: It is quite normal for spreads to widen during main news. Make sure there is enough free edge available to absorb this temporary widening that will require a larger edge.
  3. Volatile: Cmarket volatility is a considerable central factor during exchange of the news. Traders should consider reducing trading sizes and ensuring that stopping distances are sufficient to allow for the predicted volatility, while protecting against any further disadvantage.

Exchange the News Questions

How high top news will affect my existing business?

This will depend mainly on the currency pair and the actual data / figures released. The data will affect the currency directly involved, for example a change in the interest rate of the European Central Bank (ECB) will affect any European crosses you own.

However, currencies trade in pairs, so it is important to pay attention to the strength / weakness of the accompanying currency. Data that appears contrary to ratings tends to have the most impact on the market and these can most impact your open trades (good or bad).

Looking at this from a swing trader’s point of view, you may want to consider how close the market is to your stop or limit before the news. If the market approaches any of those levels, it may be best to close the trade, then and then. When the market is close to the target, it is better not to risk much to gain a little and when the current price is close to your stop, you may want to cut your losses before they may increase as a result of a slide.



Source

LEAVE A REPLY

Please enter your comment!
Please enter your name here