The Forex market is quickly becoming probably the most popular investment vehicles due to its massive volume and liquidity. While many Forex traders count on the study of historical charts to track the price movements and other forms of technical analysis to help figure out entry and exit points, there are some traders that enter and exit positions depending on economic news releases. Forex news trading is among the quickest means to get started into Forex trading, since it does not rely on any technical indicator. Trading during news announcements is also quite dangerous but the possible ways to make profits is substantial. Absolutely Nothing beats the enthusiasm of seeing the market spike more than 50 pips in the direction of your trade.
News Trading, in a nutshell is often a Forex trading method that takes benefit of market volatility during surprise news events. The Forex market is driven by high-impact economic news, and if you have knowledge how to take advantage of these news releases, you could be very successful and earn consistent income. News trading is a lot easier than it seems. Normally, a news trader would stay alert for upcoming news that are related to a country’s economy and check to enter a trade based of the news. When the announcement is a surprise, indicating, the actual release number is much better or worse as opposed to forecast number, you would immediately look for entry on the direction of the surprise.
As an example, if the US Non- Farm payroll is predicted at 100K, and the actual release comes out at 225K, you'll then expect the market to spike on the direction of US dollar strength. News traders would right away look to enter trades to buy USDJPY, USDCHF or sell EURUSD, GBPUSD.
In order to be effective in keeping monitor of all of the upcoming news, you need to have access to an effective Forex calendar and be able to get the news announcements as soon as they are released. Serious news traders purchase audio or video newswire services to recieve the news release numbers seconds after it’s announced. Many well- known financial websites offer 100 % free economic Forex calendars, updated with the most current economic figures as soon they are announced. However, the release numbers may not be obtainable until five seconds later.
A standard Forex calendar will highlight the time and date of the news, the forecast and prior numbers, the country of the news, and the level of impact of the news. Some Forex calendars color code the announcements, implying how much impact each announcement is likely to have for the particular country. The economic news that are likely to move the markets are coded red and those that are likely to have a low impact are coded yellow.
A lot of the news to always look out for that are guaranteed to have an impact in the Forex market are the US Non- Farm payroll, GDP( Gross Domestic Product ), Interest rates, and also speeches by a country’s central bank chairman.
By keeping track of the economic news releases, you are not only looking for entries to take advantage of the news spikes but can also keep an eye on a country’s economic situation and look for long term trades based on the trend and market sentiment of a certain currency. Even if you are solely a technical trader, you need to keep up with economic events in order to avoid losses.
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