As you already know, most Forex traders depend on technical analysis to trade the Forex market. In other words, traders research the historical price actions to calculate the future price actions of a currency pair. These kind of Forex traders use technical resources, such as charts, trends, and different types of indicators. However, fundamental trading, also called Forex News trading, can be just as successful, if not more. In fact numerous advanced Forex traders do nothing else but to trade the economic news.
So how will you benefit with Forex News trading?
Forex news trading is really an approach that a lot of Forex traders overlook. Let’s face it, there is so much buzz about trading the latest very best automated EA that Forex news trading just becomes mostly overlooked. The simple truth is, News trading can be an useful tool to obtain in your arsenal. Even if you are now running an impressive signal service or the best automated robot, understanding the news can make you more profitable or maybe assist you to avoid big losses. Knowing the fundamentals of a market is vital but using it with a trading system or using it with automated Forex indicator is how its real worth comes in.
First of all, let me start with describing which are the economic news and how you can trade them. Its nothing more than the economic facts relating to a country’s economy. These economic information are worth paying attention to simply because they can have a significant effect on the movement of specific currency pairs. Therefore, it presents the possiblility to make money if you know the right way to interpret these market headlines and its implications. This is a highly effective technique in itself and it's the basis of Forex News Trading, but the more you monitor how the markets react to these market headlines, the more experience you're going to get and the much better you will be able to predict the direction of the market. It is often said, that once you know the direction of the market, you already possess a 50 Percent possibility that a trade can be profitable.
It's important to remember that some market headlines possess a higher impact than others. As an example, the US FOMC Rate decision can have a dramatic impact on the USD currency pair’s movement, while the US Trade Balance data will seldom move the USD pairs.
The high impact market headlines are undoubtedly well worth paying attention to, even if you are a purely technical trader. The high impact news can create crazy swings and changes in market volatility, and will frequently make technical trading or most automated EAs completely unbeneficial over these situations.
The first thing to do is to trade the spike during these high impact news releases, or hold on a couple of minutes for the market to settle before getting into any trades. Often times, just minutes after the market spikes, you will have a possible opportunity to get intoa trade at a much better price. Let Us say the US Non- Farm Payroll release is incredibly positive, and you may decide to immediately go long on the USD /JPY or go short on the EUR/ USD. However, you can actually hold out a couple of minutes for the retracement, before getting into a trade on the route of the spike.
Forex news trading is undoubtedly not easy, and isn't for everyone. The truth is, simplest way to start is by applying a variety of methods. If you have signals on your side, you can check the news and even take a look at the trend in order to evaluate the route of the currency pairs. By double examining with several sources and properly interpreting the market headlines, you are able to enhance your accuracy in your Forex trading.