Trading the News – Forex Trading Strategies
The forex market is a 24-hour market and news can come in at anytime from anywhere in the world. Changes in the market based on economic news and data can hit any kind of trader wherever he might be and whichever currencies he chooses to trade. If you’re in Asia and like to trade the YEN, there’s news from Japan almost every day. If you like AUD or NZD then you have to watch for news out of Australia, New Zealand, and China. Same goes for EUR, GBP, and USD; you have to check the news during the morning and the afternoon if you live somewhere close to European time zones.
In stocks, major news could be considered the announcements of company earnings, profits, profits per share, industry, macroeconomic data etc. In forex trading, important news that impacts the markets could be Central Bank minutes and members press conferences, inflation reports as well as national and international economic news and data.
One of the first lessons for new traders is that when trading you should keep out of the market during major news releases. Nevertheless, we often find ourselves trading during the news and most of the time it’s not because of greed. Some like the adrenaline, some are addicted, but the majority of traders just like the profits. After all, we are in this business to make money and the risk is a necessary aspect of that.
Trading currencies always involves two currencies. When a trader plans to open a position both country’s upcoming news should be taken into consideration along with any other international news that could potentially affect the pair.