Among the best forex market movers is the major economic information. It is the same volatility or movement that most new traders look for when they learn to trade currencies. In this article, I will cover the methods of trading news releases, vital tools and resources to use, fundamental indicators, and important tips on how to trade.
How Can I Trade News Releases?
There are several methods that traders can take when coming up with a forex news strategy that depends on the programming of the business relationship with the news release.
Most traders love to trade and make decisions immediately after an announcement occurs. Others choose to trade in less volatile circumstances before an announcement or a release. In summary, you can use one of the following categories to trade:
1. Trade before the News Releases
Forex trading before an announcement is beneficial for brokers looking to venture into the market in less unstable conditions. Overall, traders with the highest risk aversion incline towards this method. They do this by trying to invest in a quieter period before the trading range from the news release or trade based on the trending news.
2. Trade during News Releases
These financial news trading approaches are not for the weak-kneed, as it implicates trading during the news announcement or in the instants that follow immediately. This is when the trading is more volatile, underscoring the importance of a clear strategy and risk management.
3. Trade after the News Releases
Trading after the release means venturing into the deal once the market has had time to process the news. Often, the market gives hints for its upcoming direction via price action, which offers great opportunities for traders.
Main Tools and Resources for News Releases Trade
- Economic Calendar: Discover when the announcement of important data- such as GDP, Non-Farm-Payroll, PPI, ISM, and CPI – will take place.
- Central Bank Calendar: The interest rate declarations of Central bank may have a profound impact on financial markets. Find out their scheduled time.
- Real-time news: stay updated with the latest news, with informs from the top analysts. Also, check out all the important news of the day and analysis by tracking the market news.
What are the Best Fundamental Indicators?
Inflation is a constant increase in the sum of currency inflow, which sequentially raises the price of services and goods. For this reason, inflation is among the most significant fundamental Forex indicators because it shows the health of an economy. It is vital to recognize that even with the influence of central banks, it is hard for governments to control inflation.
2. Interest Rates
These refer to values that central banks charge for lending cash to retail banks. They are a key tool in inflation regulation. Central banks set interest rates, which are generally communicated to the public during media conferences, to evade unnecessary market chaos. Commercial interest rates go hand to hand with interest rates given by the central bank because private banks cannot give at a cut-rate. It is this same connection that turns interest rates into a power leveller for the economy, and hence, an essential indicator of fundamental analysis.
GDP (gross domestic product) calculates the total worth of all services and goods manufactured in a country in a given time. It is among the best general fundamental indicators of the Forex economy. From economic theory, everything is straightforward: GDP growth shows economic growth. Although, the relationship of inflation to GDP, and therefore also to the currency, is a subject of debate.
Important Tips When Trading News Releases
- Focus on major news from the UK that can have the biggest impact on the market
- Await for the announcement of the selected release and then get into the market in line with the plan
- Keep in mind, the market response to a news release generally takes from 30 minutes to 2 hours
- In case the technical analysis and fundamental reasoning fail, and the market’s response to the news does not match your anticipations, don’t go against it. Follow the market trend (you’ve probably omitted some important details from your review or misinterpreted the impact of a particular release in its post)
- Do not rush into an exchange. Wait for strong signals and the confirmation
The currency trade is particularly sensitive to temporary movements due to the publication of economic news releases from the UK. If you need to trade the news in the forex trading successfully, there are some important considerations. These are: recognizing the reporting time, understanding publications in current economic events, and discerning how to trade them.
Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances or needs.
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