Home Forex EducationForex Concepts Trading on Forex News, Arena of Vigilant Traders:

Trading on Forex News, Arena of Vigilant Traders:

by Ahsan Aslam Khan

Trading on Forex News is one of the many interesting layers of Forex trading. In the wake of Pandemic, Forex trading has become a need of the hour. There are millions of articles available about it. All of this information is too much for a novice trader. This heap of information can easily confuse a novice trader. A newbie in trading finds him in the jigsaw puzzle of too many trading strategies. Bloggers are advising about it like skilled professional even if they have never tried it themselves. The sheer number of websites and television programs about the forex news often make them anxious. Many websites air Forex news live as well, to heighten the emotions of the traders. This is enough to misguide a newbie.

Lazy Vs Vigilant Traders:

Trading on Forex News demands the traders to be vigilant and fully aware of the surrounding. The breaking news and current affairs can anytime turn the tables. The price can take a leap due to some positive news. While at the same time, any unfortunate news about the economy of any country can affect the trade of not only its own currency but also the trade of all of its counter-currencies. Thus if you believe that you can earn profit by being lazy or unaware of the current economic scenarios then you are sadly mistaken. In this situation, I would suggest you to try your luck somewhere else. If you are a lazy person then trading is not your cup of tea.

How news affect Forex?

Forex trading News serves as the driving force in case of Forex trade. It becomes a tough row to hoe without knowing the latest economic news. Alternatively it becomes easy to trade if you know the expected direction of the price movement of a certain currency. Now the question arises, ‘How can anyone know and predict this?’  It is not a hard nut to crack if you keep a close watch on the latest news of the economy of that country whose currency you want to trade. If you are well aware of why a currency is falling or rising then you can predict its next move as well. Thus trading on news becomes easy for you if you are a person having up-to-date information. Being familiar with currency news trading really helps you.

How to know Forex News for Trading on News?

Internet serves as the primary source of news provider for trading on news. Expert traders often glue their eyes on the screens for any prominent news. They are always active towards such news. they do not hesitate to make alterations in their plan according to changing circumstances. Forex newspaper and Forex market updates today always remain under spotlight. They always react within minutes in case of announcement of any significant forex market news.

Greatest strength:

The greatest strength of trading on news is that Forex market does not have any certain time schedule. It remains open 24 hours. The price of the currencies responds to the news within minutes.

How to Read Forex News?

Well, what is the peak time of the announcement of News? Mostly the significant news is released before 10.30 am according to the Eastern Time. Thus you should try to be an early riser. Like all other fields, Forex trading prefers early risers.

Which News holds great significance?

The next question that attracts the attention of the traders is that which news is considered important? The key economic factors influence the forex trade. Therefore you need to pay attention to the news relating to the interest rates, unemployment data, Inflation figures, industrial production, Retail sales reports, Trade balance news, traders sentiment reports, the reports about the manufacturing sector and the surveys of Consumer Confidence. These are the key news that you should keep your eyes on.

Effect of Forex Market News:

Sometimes the impact of any crucial news lasts for days. However in most scenario, if the news is not that much significant then its impact will last for at least 3 trading days. The fourth day will be a new day. So if you are affected by any certain news then you need to take a break for at least three trading days. Afterwards you can start afresh.

Driving Force:

The news of the major currencies of the world serves as the driving force in forex trading. This aspect of trading often confuses the novice traders as they do not know which news to observe. There are many currencies in Forex market. It is not possible to keep an eye on the news of the entire world. Thus you need to know that there are basically eight major currencies in the forex market. These eight currencies drive the trade of the entire forex market. Therefore you need to observe these currencies. Similarly you must closely observe the news related to these currencies and their countries to get a better understanding of the next moves of currencies. These currencies include: 1) USD, 2) EUR, 3) GBP, 4) JPY, 5) CHF, 6) CAD, 7) AUD & 8) NZD.

USD:

U.S. Dollar (USD) is the part of all major currency pairs of forex market. Almost 90% trade of the forex market is related to the currency pairs of dollar. Thus traders treat it as the most important currency. Therefore if you cannot keep a tab on the news of all eight currencies then you must pay heed to the news related to the US economy and USD.  It can help you out to get a grasp of the upcoming move of the counter-currencies of USD.

Significant Time to take advantage:

forex news

The period before the release of any significant report holds great importance for traders. The traders take advantage of the stress before the release. Mostly the rising trend of a currency is usually capped before the announcement. The uncertainty and indecisiveness of the traders often lead them to make wrong decisions during this period. Similarly the traders take advantage of the breakout after the announcement of a certain news/ release of a certain significant economic report. Here volatility of the market is the biggest source of disturbance for the traders.

For Example:

In case of the economy of USA,  the number of the payroll was to ne released. The traders were expecting about 120000 more jobs in the economic sector. However the increase in the jobs was mere 56000. It is about half of the expected figure. Therefore the disappointment of the traders is reflected through the sell off of USD in its trading pair of EUR/USD. It all happened within half an hour after the release. Well it is the charm of Forex trading.

Practice, Perfection, Prediction & Trading :

No one is born perfect. It is practice that makes a man perfect. Same is the case with trading. Traders devote a lot of their time to master the trading strategies. They learn and explore the multi-layers of Forex trading. Novice traders often wonder about the super-natural abilities of the professional traders to correctly predict the future moves of currency. Frankly they are traders, not magicians. They cannot foresee the future. It is their hard work of days and nights that pays off in the form of correct predictions. These professionals and expert traders keep an eye on the latest News and analyze its impact on the currency. Then they make decisions accordingly. They do not make rash decisions. Their decisions are thoroughly calculated therefore they are able to earn heaps of profit. And you can also do so. Moral of the story: ‘Hard work pays off.’

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