One of the key aspects of trading currency pairs is trading on news. This skill is extremely important both for a beginner, learning the basics, and for an experienced trader, who aspires to improve his skills and skills. When building a daily trading strategy, it is necessary to pay special attention to the dates and times of publication of news for the period in which the trade will take place. To succeed, trading on the news, you should: – Track at least an approximate point of release of significant news. – Know the principles of the market during the publication of news reports and methods of making a profit from the use of these principles. – Consider technical analysis data in the context of certain news reports.
You need to know which information is capable of setting the market in motion, and which has a minor effect on the movement of currency pairs. It is not difficult. Traders have long identified the most significant economic factors and macroeconomic indicators that have a significant impact on the dynamics of changes in exchange rates. We will give only some of them.
Decision-making by central banks at the discount rate: – Inflation rates. – GDP (GNP) and industrial production index. – Indicators of business activity. – Speeches of persons occupying key positions in the financial sector of countries whose economies and policies have the greatest influence on the exchange rate formation (USA, EU member states, Japan, Canada, Switzerland).
Unexpected news on Forex is the exception rather than the rule. More often than not, the news that will be published is already planned and to some extent “included” in the course. This is because the official release of the news is preceded by the publication of expert forecasts.
The market reaction to any news can be divided into the following types: – If the news is in line with expert forecasts, then the currency of the state that publishes the news will not change significantly. – If analysts predicted the content of news, but did not adequately assess the degree of its influence on the market, then the currency exchange rate will continue to move within the framework of the established trend, but the volatility may increase significantly. – In the event that the experts made a mistake in their forecasts, the course will unfold.
Being engaged in the analysis of the impact of fundamental indicators of the economy on exchange rates, it is necessary to give priority to the direction of the trend. If the news data contradicts the current trend, it should be borne in mind that the impact of such news will be localized by the action in time within a few hours. Otherwise, when the news corresponds to the current trend, we should expect its acceleration. When preparing to trade on news, do not forget that the maximum effect from the news release can be achieved only if the published data is combined with the data obtained on the basis of technical analysis.