How to Trade Forex News and More
It’s true that Forex news impacts market movements. However, the most seasoned traders out there will actually tell you that you just cannot really go on to gauge the kind of impact that the news will have. The forex market is impacted not only by US news but news from around the world. Once again, if you are taking the advice of experienced traders – they are most likely to ask you to steer clear of trading during high-impact news quite simply because of the erratic nature of these types of news announcements.
The key to protect your principle is to sit on the sidelines or trade in your demo account if you don’t have the due experience of dealing with such high-impact announcements. Stops can help to protect your account, but these can easily be “run” during a high-impact news event. Here below are a few tips with to help you trade market news if you decide to dip your feed in the water! Is it that difficult to trade news announcements? We will go through this particular post in a bid to discover.
As always, just be sure you are trading with money you can afford to lose!
Slingshot strategy: How can it help you trade news?
One of the most common routes taken during high-impact announcements is the Slingshot strategy. This particular strategy is designed to help you during cases of a strong print in the tape either higher or lower. With this particular method backing your trading strategies, you can actually go into the Non-farm payrolls report (NFP) with your full positions so that if any volatility whatsoever is created post the announcement you can move your trade to be profitable. There are several entry strategies that you can try out here. Scaling into a trade remains one of the best ways to play the forex market. With the use of this strategy, traders can secure better control of their trades. This particular technique allows you to observe and analyze the market so that you can remove the parts of the market as it moves in your favor and scale out of the losing portion of the trade.
The Currencies that One Should Focus On
It is important to find out which currencies you should focus on while you are trading news. Here is a look of some of the most popular traded currencies:
- US Dollar (USD)
- Canadian Dollar (CAD)
- Euro (EUR)
- Australian Dollar (AUD)
- Japanese Yen (JPY)
- British Pound (GBP)
- Swiss Franc (CHF)
- New Zealand Dollar (NZD)
How to Treat the Releases
Notably, it’s the US dollar which ends up being a part of the currency pair that most folks will decide to trade. So, there is no doubt about the fact that U.S. economic releases actually end up having the most pronounced impact on the forex market. However, a trader needs to take whisper numbers into account as well. While the reported figures are definitely important, you cannot really rule out unpublished forecasts as well. Additionally, you should remember that some releases are always going to be more important than others. You can gauge a lot about the significance of each release by estimating the importance of the country releasing the data and – of course- the importance of the data being released. Business sentiment surveys, interest rate decisions, retail sales, industrial production, unemployment, trade balance, inflation and industrial production are just a few common releases that traders need to consider.
