News Trading - Doing it Correctly
Written by Owen Moore
You simply cannot bypass the influence news has on the forex market. If you do you are sure to disregard your technical analysis based system at one point but little will you know that your system is as innocent as you are as ignorant of the influence news has on the market.
Before you think of trading the forex market, you have to know what moves the market. The answer to that is simple. The news! No matter what Holy Grail of technical analysis you use if you are not aware of the basic global news that actually move the market you will be baffled frequently by movements you will think are bizarre.
Why trade the Newsr
Important news makes the market move because traders will react on release of the news. You will be better prepared if you are on the right side of the move.
Cons of News tradingr
As with all methods of trading the forex market there must be a disadvantage.
-Because the markets are so volatile after the release of important news, most brokers will likely increase their spreads and this can hurt your trading.
-Slippage becomes probable during periods of important news releases. It occurs when due to the fast movement of the market when you fill an order you may be filled with a different price.
-Big market moves don’t generally move in a single direction. The market may usually dangle up and down before participants eventually decide on the best direction.
Profitable as it may be it simply is not easy. You need to have a good grasp of Economics and know how certain variables react when certain things happen. And this is simply not easy.
Which News is importantr
Trading the news is difficult not only because you need to have an understanding of economics but because there are so many news releases per day and if you were to act on most of them you definitely will get confused. Below we look at the trade-worthy news reports.
The US is the most important player in the market and you should follow for a start only news from the USrn-US inflation and central bank news are so important and play a big role in the forex market.
Information such as wars, natural disasters move the market significantly but not as much as central bank information.
Follow major stock market motions too.
When trading the news your focus should be on the most liquid pairs.
The pairs to follow are: EUR/USD, GBP/USD, USD/JPY, USD/CHF, USD/CAD and AUD/USD.
As a conclusion take note of the following points:
When you have a directional bias, you are expecting price to move a certain direction, and you've got your orders in already. It is always good to understand the underlying reasons why the market moves in a certain direction when news is released. When you have a non-directional bias, it doesn’t matter to you where price is heading. You are ready to follow.
Article author
About the Author
Further reading
Further Reading
Article
How Should We Celebrate the Anniversary
How Should We Celebrate the Anniversary of the Birth of Prophet Muhammad (PBUH)? For Muslims, Prophet Muhammad (PBUH) is the best creature ever. He is the last messenger and prophet sent by the Almighty Allah to guide people from the darkness of ignorance to light of Divine guidance. At any human scale, he (PBUH) is a man of extraordinary achievements. This is a fact admitted not only by Muslims, but by non-Muslim thinkers and philosophers also. Having put Prophet Muhammad (P
August 25, 2023
Article
This is Jesus, Son of Mary, the Word of Truth
This is Jesus, Son of Mary, the Word of Truth rn Festivals and celebrations are considered one of the distinctive characteristics and key features of societies around the world as they constitute a major part of cultural fabric for people. This means that there is hardly any human society without festivals, whether they are related to religious occasions or non-religious ones. While there are some Islamic festivals like, Eid al-Fiá¹r and Eid al-Adha, there are also various c
August 14, 2023
Article
BRISE Token: How to buy Bitgert's Crypto Token
Why do traders buy native tokens of exchanges? Native tokens, often referred to as exchange tokens, are digital tokens that cryptocurrency exchanges issue to offer their users a variety of advantages. These tokens can be exchanged for access to premium services, a reduction in trading fees, and payment for transaction costs. But what actually makes these tokens unique is their potential for value growth, which attracts investors as an appealing investment opportunity. Investo
May 19, 2023
Article
Customet satisfaction
Customer satisfaction Despite all the effort and money poured into CX tools by companies, customer satisfaction continues to decline. In the United States, it is now at its lowest level in nearly two decades, per data from the American Customer Satisfaction Index (ACSI). Consumer sentiment is also at its lowest in more than two decades. This negative dynamic in the customer-centric ecosystem in which we now live creates the challenge of figuring out what is going wrong and wh
March 18, 2023