Trading news releases can have a significant impact on the trading/” title=”Marubozu Arrows Alert: An Analytical Approach to Forex Trading”>currency markets, and savvy traders who seize the opportunity to capitalize on this volatility can some impressive returns. With the right strategies, you can apply sound principles of fundamental analysis for trading on news releases. Here we look at the high-impact economic news releases that move the Forex market, and the strategies that you can use for trading them effectively.
Straddling Both Sides of the Market
One of the most popular strategies for trading on news releases is the concept of ‘straddling the market’, by placing buy orders above the current market price and sell orders below it. This allows traders to benefit from both a bullish or bearish movement in the market in response to news releases. The key for this strategy is timing. Positioning yourself too soon before the news can mean risking exposure to extraordinary volatility as traders wait for the results. Placing the order too late means missing out on maximum potential profits.
Long term trading strategies
Another way to capitalize on news releases is by taking a long-term approach. Instead of attempting to capitalizing on short-term price fluctuations, look for patterns that play out over a longer period of time. For example, pay attention to the Producer Price Index (PPI), which measures the change in cost from selling goods from the producer to the consumer. Analyzing the trend of the PPI over the past year or two can give an indication of future price movements and give you a competitive edge.
Short Term News Trading Strategies
These can be more complex than the ‘straddling’ strategy discussed above, as entry and exit points may be more precise. One of the most popular of these is the Consumer Price Index (CPI) news trading strategy, which it seeks to capitalize upon the inflation and deflation cycles of the market. The CPI shows the variation in price from the cost of goods over time. An increase often suggests inflationary pressure and can be a sign that the currency is going to gain strength. The key with this strategy is to look for a short-term entry opportunity and move quickly so you don’t miss out.
Finally, fundamental traders often pay close attention to the Federal Open Market Committee (FOMC) meetings, where the Federal Reserve Bank makes decisions on the strength of the economy. Following these closely and reacting to the results rapidly can potentially yield significant profits.
In conclusion, news trading strategies can be highly effective in the Forex market when used correctly. By understanding the potential impact of key news events, you can devise strategies to capitalize on the expected movements in the market. Pay particular attention to high impacting economic events like the CPI, PPI, and Fed decisions, which can move the currency markets with little to no warning. With the right strategies in place, you too can benefit from these news release opportunities to develop a profitable trading system.
Forex trading can be an exciting and rewarding career. But to succeed in the forex market, traders need to be well informed of the various happenings and events that impact the global currency markets. As such, it is important for traders to be well versed with the latest forex news and trading tools, as well as use reliable tools such as trading signals to increase the accuracy of their trading decisions. In this article, we will review the most-impactful and relevant forex news that traders should be aware of to make informed trading decisions.
Understanding High Impact Forex News
High impact forex news refer to any news that has direct effects on the prices of financial assets, namely currencies, on the global currency markets. These events include economic reports, central bank decisions, official statements from policy makers and events such as elections. Such reports are usually market-moving and can cause volatile swings in the market. As such, it is important for traders to be up-to-date with any announcements that may have a direct impact on the global currency markets.
Factors That Affect Currency Prices
One of the most important fundamental factors that influence currency prices are central bank interest rates. A rise in the interest rates generally causes the currency to appreciate. Conversely, when a country’s central bank lowers its interest rates, the currency tends to depreciate. Apart from interest rates, other factors that affect currency prices include economic output, inflation rates, unemployment rates, and political and social events that could have an effect on the respective country’s economy.
Sources of Forex News
There are numerous sources of news related to the global currency markets. Many blogs and websites provide up-to-date information about forex news as well as trading signals. Additionally, brokers such as FXCM and TradingView offer real-time analysis and news about the forex market. Apart from these, traders should also subscribe to premium forex feeds such as Investing.com and Investopedia.
Traders must be well informed of all the major events and news that affect the global currency markets. With the help of these sources, traders can make informed decisions about their trades if they are aware of high impact news and events. Therefore, it is important for all forex traders to stay informed and be aware of all the latest news. Moreover, traders should use reliable trading tools such as signals to increase the accuracy of their trading decisions.