Forex news or fundamental news trading is the primary force behind the currency markets. The currency market is influenced by high impact news events, and if you try understanding to take advantage of them, you can increase your chances of profitability and can avoid expensive mistakes. Many new day traders come to a shocking awakening realizing the importance of news events only after getting to watch a perfect profitable trade turning into a loss in matter of seconds, while experienced traders foresee the move and add to their daily profits in a coherent manner, most of the high impact news events are planned at the same time each month.
3 Things Impacting Forex News
Fx news trading, in a shell is a method to take advantage of the volatility of the market during sudden news event. The key is the term sudden. You have to understand 3 things each of which comes with high impact news event.
Forecast or Consensus: The figure is derived from a survey by economists, normally done by news agencies. This figure represents the market’s expectation about the release.
Previous or Past: The actual figure for the previous month. Many times the market looks at the current forecast against the previous release to evaluate improvement. The figure is also important because sometimes you will get the revision or modification of the previous release which could be a surprise for the market.
Actual Release Figure: The actual release of the news from official sources is this figure. If these rates differ from the forecast figures, then you are looking at a definitely moving market and will have a surprise in store. And thus these trading news utilize the advantages from such surprise. The margins can be huge or minor based on the actual release and this is based on the deviation.
Benefits of Trading News
One advantage of using forex news trading is you can use them to make quick profits without much previous trading experience. Trading news only requires some common sense in real.
Another advantage of using them is there are many different types of news events affecting the prices in the forex market. That means you can trade the news regularly and at the same time make profits; you will never get stuck and you will never struggle looking for new potentially profitable opportunities.
Trading the news can actually be quite fun, especially when you compare it to staring at various charts, graphs and such looking at price action, which can seem pretty tedious after a few hours of more technical trading. This is one of the reasons why news trading is popular, especially among the newer traders. If you are a beginner and wish to use a more logical forex trading strategy, you might want to consider trading the news.
When using forex news trading you will be able to potentially make a lot of money in a short period of time. You will also have many chances to trade the news in the forex market. There are many experienced forex traders who use news trading strategies and you should still remember to conduct adequate fundamental analysis no matter what as important news releases can affect the markets to a certain extent.