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#1 31-03-2023 09:07:47

pysong
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How to Trade the News in the Forex Market

How to Trade the News in the Forex Market



So far in our fundamental analysis course, we’ve learned what fundamental analysis is, the role of macroeconomics in the currency market, and what affects the prices of FX currency pairs. Well, one of the primary drivers of currency price movements is news reports. In fact, trading news in the FX market is also one of the most common trading techniques used by day forex traders and long-term investors. And, also one of the most complicated…To get more news about learn forex trading, you can visit wikifx.com official website.

But now that you know how macroeconomics and news announcements affect forex pairs, you need to get familiar with major economic events, how to read them and get familiar with 2-3 trading techniques that will help you to trade news events.
Forex news trading strategy – How to trade the news in Forex trading?
Honestly, there’s no one trading strategy or trading technique to read and trade the news in forex trading.  Much like many other strategies, it’s a trial and error process so you’ll need to practice and master this skill. As a matter of fact, many forex traders prefer not to trade during news events.

For example, my first trading experience was by trial and error when I entered a trade right after the Non-Farm Payrolls – the most important and scary news report. I lost half of the capital in my account in less than three minutes. Now imagine my face. Not fun!. Trust me, trading news releases are not easy…nope.

Nonetheless, as you can imagine, there are lots of trading opportunities during and after times of news announcements. Further, When trading the forex markets, you will most likely encounter a situation where you are trading news or you have an open position at the time of news release.

So let’s explore three methods that will help you to read and trade news in the forex market.

Wait for 15 minutes after the economic data release
The first method to trade the news is also the safest one. With this strategy, forex traders tend to wait for at least 15 minutes after the release and see where the wind blows. Look, the markets have a strange dynamic. Remember my trade? Generally speaking, I was actually doing the right thing. 

So what happened? After the NFP announcement, the market went up and down and down and up and up and down… until it finally took a direction. And it makes sense. Otherwise, news trading was the easiest profession in the world and everybody would have been a news trader. Remember, “buy the rumor and sell the news”.

Enter a trade immediately after the announcement or economic release with a stop-loss order
The second technique is basically quite the opposite of the first one. Meaning, you should closely watch the economic calendar and try to interpret the data yourself. Then, based on the actual data number (positive or negative), you enter a trade and immediately insert a tight stop-loss order in the other direction with your chosen risk-reward ratio. If the trade goes against you, your loss will be limited. However, if the market goes in your favor, you can change the stop-loss order in your trading platform to the price where you entered the position (or slightly above).

It’s a risky trading strategy but… it works for many traders.

The breakout forex news trading strategy
Finally, if you are a breakout trader, this is the perfect trading strategy for you to trade economic news. Simply put, with this trading strategy, you do not enter a forex trade until the market is about to break the daily high or low (or weekly, monthly, etc). Assuming you plan to trade economic indicators news, there’s no way you can actually trade all economic events and news releases that are released in the financial markets. Instead, you need to get familiar with the most important economic growth events that have a strong impact on interest rates and prices of FX currency pairs.

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