Forex News Trading

Filed under: Learn Forex Trading |

There are many ways to trade the forex markets. Personally, I use technical analysis only, but that does not mean that you should not explore other avenues that might better fit your personality. There is no right way to trade, but there is a right way to trade for you; and it is up to you to find that method. In stock trading, there are two basic ways to trade – these are by technical analysis (looking at and analyzing charts), and by fundamental analysis (looking at the accounts and financial health of a company). However, in forex, it is slightly different as forex pairs are obviously not companies. Therefore, people either trade forex by technical analysis, or by something called “trading on the news”.

 

Trading the news in forex basically means trading immediately before or after an important economic news announcement – which are often scheduled. These news announcements about different countries’ budgets and financial health can cause wild fluctuations in currency pairs. Natural disaster news stories can also have a big impact, as we saw from the tsunami in Japan earlier in the year which caused wild fluctuations in the Japanese Yen currency pairs. If you know what you are doing, then you can make big money by trading around major news announcements. But it is not easy.

 

My personal philosophy is that price action always reflects what is going on in the market, so there is no real reason to follow news stories. Plus, by the time you see the news, it is usually already factored into the price of a currency pair. However, it is good to be aware of any major stories, as the markets can be too volatile and unstable and spreads can widen so much that you can be stopped out in seconds of making a trade. However, most of the time, news is old news, and price action has already taken it onboard.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>