As a rule, the most significant changes in the foreign exchange market are manifested after the release of financial events and the reaction of the exchange to them.
Using fundamental analysis and trading on the news is a very effective, popular, and popular technique among market participants.
Every day, a huge amount of news is published, and many players use them as the main tactics of the currency market.
But this way, or otherwise, experts very inconsistently evaluate this method of trading: some argue that the exit of events is a great chance to raise their earnings, while others recommend not to trade at a time when news is published.
Actually, to conduct trading on the news is not very easy: for a trader, it is important not only to be theoretically savvy but also to have macroeconomic experience.
Investors and traders, for whom the forex market is not just a hobby, but a source of earnings, will strive to devote the news to the maximum time. In this, there is nothing strange: the correctly chosen trading tactics of the market are more influenced by market data.
This information contributes to our trade: it enables the forex player to make a profit, and not to go into minus.
But how to work with the news? How to monitor events and make forecasts?
Create news predictions can be, referring to the two main tools of the forex market. This is a news indicator and an economic calendar.
Statistics and practical experience tell us that effective and profitable tactics can be created for any news.
Events are conventionally divided into six main groups.
The most significant one is one of the most popular and relevant blocks, which includes important economic news of a global scale.
1) news about changes in the state's credit and money sector;
2) analytical indicators and data on the economic situation in the country - information about the trade balance, the unemployment rate in the country, price indices, and other information;
3) information on the Central Bank (in particular, their monetary policy).
This is important news: it is the central banks that dictate their conditions and influence the formation of the market trend;
4) events that are directly related to currency interventions (within the state);
5) news of the financial markets world: they somehow affect the international currency exchange.
Follow economic news can be direct - tracking news on the site through a forex broker.
Typically, brokerage companies offer users a tool such as an economic calendar. It includes a full list of events and data, reports, the degree of their significance, and the date (time-out).
In the economic calendar, you can find past data, and then the final results (after the release).
Choosing to trade on the news, you should pay special attention to those events that are planned: they are already present on the calendar, which means that they can provide us with the expected market reaction, which somehow affects the success and efficiency at the output.
Of course, news that was little expected often has a high level of volatility, but that's prepared for them and predict them extremely difficult.
Trading on the news is distinguished by two main approaches:
1) method number one: it is the probability to make a prediction not only on the event itself but also try to anticipate the market's reaction to it.
This tactic of the market involves the installation of deferred orders (buy or sell orders) in the direction of the price.
On the news, the market is characterized by the high speed of movement, and in this period it is characterized by sharp price changes - jumps in one direction or another.
The most optimal variant of insurance is the installation of protective stop-orders - stop-loss and take-profit.
Orders will help the player to save the deposit from the sink, and contribute to a stable profit if luck is on the side of the trader.
Experienced market professionals recommend setting an order for both directions simultaneously, counting on buying or selling a currency.
But also trading on both fronts, we somehow can not do without stop loss and take profit.
The degree of their importance is quite high because one of the deals will accurately give us a loss.
This tactic is rather unsafe, and its use only makes sense if all the risks are calculated in advance and insured.
The second option is more secure, but it requires the player's maximum patience and endurance.
It is extremely important for a trader to wait for the news to come out, and of course to wait for the market to react to this, and only then to take action.
There is no need to predict and anticipate the future price movement, just need to relax and go with the flow, focusing on accessible information.
It's simple: we are waiting for the reaction of the exchange, and only then do we implement our move.
Sobriety and rationality are our all: act when the market demands it.
The most basic thing for a trader is to pay attention to market sentiments: whether they change after the event or are unchanged.
This tactic is good for beginners.
Regardless of the tactics chosen, remember the risks. Therefore, before you start real trading, you need to test everything on the demo account, and only then go to the real one.
Advantages and disadvantages of working with news
Plus number one is that this is a fairly high-yielding strategy for the foreign exchange market.
At Forex, the news is in the role of fuel: they feed the trend on the way down, or up.
The impact of the news is quite short, and within an hour of its release, we can safely close the deal.
The second positive thing: you can trade in automatic mode or in semi-automatic mode.
But there are also disadvantages: for example, the fact that the strategy seems too simple.
Many neglect analysis, and additional means, what not to do.
Undoubtedly, trading on the news is not an easy technique, but at the same time, it is very profitable if you approach it with knowledge, patience, and stocking!