February 11, 2014

How to Trade Forex News

forex news

Trading forex news is a popular choice of traders as there are large-scale fluctuations in the foreign exchange market both before and after the release of important economic news. Trading news is released on all five days and it usually focuses on the eight major currencies that are traded. The major currencies include AUD, USD, EUR, NZD, JPY, CAD, GBP and CHF and news related to these currencies are closely followed by traders.

Key factors to remember when trading forex news

If you want to trade based on forex news you need to know when the important economic news releases are so that you are able to plan everything properly. You can make use of the economic calendar to gain knowledge about the important economic news release dates. Before you start placing a trade based on news you need to understand how the market may react to it.

You can analyse the historical trading data to gain an understanding of how the market reacted in the past to news releases. However, you also need to understand that it is not necessary that the foreign exchange market react in the same way as it did in the past.

As at least six to eight news releases happen each day, you need to distinguish between news that is important and news that is not important. Inexperienced traders tend to waste a lot of time and effort by focusing on news that is not significant. You can avoid this easily by learning about news that is significant.

It is important that you stay up to date with the economic news releases. If you place a trade after the news has lost its relevance you may not be able to gain from such a trade and you may end up losing money. It is best to place a trade when the news has relevance and causes changes in the forex market so that you are able to profit from the fluctuations.

Impact of forex news on the foreign exchange market

Forex news can cause both short term and long-term market fluctuations and gaining awareness about it can help you time your trade in an effective manner. The key news releases that are followed keenly by traders include interest rate announced by central banks of different countries, inflation rate, unemployment rate, retail sales, trade balance, consumer confidence, manufacturing sector surveys and industrial production. These economic news releases are an indication of the economic health of a country.

The impact of the news can last for a few hours, day, weeks or months depending on the significance of the news. You can choose the entry and exit points based on the impact of the economic news. You need to be careful when you are trading news as you can get hit by the volatility of the market and this can result in big losses. It is not necessary that you place a trade after each economic news release. When you trade around big news releases you may be able to earn regular returns on your investments.




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