Forex News Trading Strategies

news release

Slippage is anything but a small issue, with it being more prominent than ever when you enter the forex market to trade during major important news events. Due to the swings in cost, you’ll find that your order price can be quite different to what it may actually cost to put through the trade. Through this, you easily can end up taking on massive losses, as an element of control is certainly taken out of your hands.


The EURUSD attempts to breach – 02-03-2023 –

The EURUSD attempts to breach – 02-03-2023.

Posted: Thu, 02 Mar 2023 04:11:58 GMT [source]

Although the market hype built up by news releases and economic reports may not be long-lasting, news traders can take advantage of price actions of financial instruments, currencies , and securities. The GBP/USD pair is among the most liquid currency pairs in forex trading. If your trade strategy depends on swift reactions to sudden news events, then that liquidity may help you jump in and out of positions as quickly and precisely as possible. However, if the news event involves Britain and another country, it may be better to trade that pairing to target that news more specifically. In this article we will take a look at various data types, and attempt to classify them according to a few basic criteria. We will also try to explain how news releases determine market prices in the long term, especially those of greater value and impact on the market.

What is the best GBP pair to trade the news?

As you are probably already well aware by now, big market moves have the power to pull the market in both directions. When a major story hits the forex newswires, it can often send the market flying in one direction, only to whip it back the other way in a flash. What this can mean is that big market moves can really make determining the true market direction difficult at times. Looking at Nonfarm Payroll results as an example, they have the tendency to wreak havoc in the world of forex. For the EUR/USD symbol, this year proved to be particularly tumultuous, as, according to various news reports, it initially threatened to undermine its price, only to then go on and fuel its resilience.

financial markets

The relatively small fall, occurred in the previous week, may continue. Then, again expect the beginning of the week and place a new order. Brokerage services in your country are provided by the Liteforex LTD Company (regulated by CySEC’s licence №093/08).

In general, the level of information required to trade forex usually comes from relatively open government sources for fundamental analysts or from the price action itself for technical forex traders. As a result, it tends to be readily available to just about anyone in the world in the modern information age. The primary exception to the general open availability of information in the forex market tends to be market flow information. This includes the execution of large trades and substantial orders in the forex market to which only the parties involved in the major transaction tend to be privy. For the most part, most experienced traders will avoid trading the immediate aftermath of this release, due to the somewhat nutty price action that follows it. The success or failure of position trading hinges on the trader’s understanding of the market in question and their ability to manage risk.

However, your other entry will get triggered and if that trade wins, you should recoup your initial losses and come out with a small profit. Your stops should be placed approximately 20 pips below and above the breakout points, and your initial targets should be about the same as the range of the breakout levels. Note that the smaller the range is the more likely it is you will see a big move from the news report. Find the approximate amount of currency units to buy or sell so you can control your maximum risk per position. Learn how to trade forex in a fun and easy-to-understand format.

Data on employment and job growth can provide insight into the health of an economy. Strong employment numbers can indicate a growing economy, which can lead to currency appreciation. Weak employment numbers can indicate an economic slowdown, which can lead to currency depreciation. Price breaks out – one of your stop loss orders will get hit and hopefully, you will reach your target level on the remaining open position. If the consensus and the actual number is inline with the market expectations, you would not trade.

Learn to trade

Because scalpers are so reliant on the spread, it’s important for them to have a good relationship with market makers who determine bid and ask prices for a given currency. Oftentimes, scalpers will hold professional trading accounts with brokers to access lower spreads. Their success also hinges on their use of a low-latency platform that is capable of executing multiple trades at a time with speed and precision. The market traded lower and lower during the day, and when the actual news was released, the price went in the other direction – upward- despite the bad news released for the Euro currency. The psychological aspect of news trading is extremely important as the traders must process all variables, interpret the released figures and put their plan into action, instantly.

Figure 1 lists the approximate times of the most important economic releases for each of the following countries. These are also the times that players in the forex market pay extra attention to the markets, especially when trading based on news releases. Forex news trading means strategically trading based on market expectations before or after a news release as some significant news releases can move the market. Overview of most most popular strategies, entry and exit signals, stop losses and take profits. What is CFD and how to trade contracts for difference in different markets? This is a profitable weekly trading strategy, which can be used for position trading with different currency pairs.

news release

From a fundamental standpoint, swing traders often use micro- and macroeconomic indicators to help determine the value of an asset. Because swing trading demands quick action and close market oversight, it’s typically favored by day traders who are available to monitor changes in price momentum minute to minute. Despite being classified as a short-term trading strategy, this approach demands that traders hold their position overnight and may keep them in a trade for a few weeks at a time.

Number of trading opportunities

This could give the an opportunity to buy the security before everyone wants to buy it, and turn a profit by selling it when the demand and the price increases. There are manytrading strategiesused by traders in the financial market. These strategies are divided intotechnicalandfundamentalanalysis. The economic events calendar also shows the time and date of when the indicator data was released, the currency that they are expected to affect, and each indicator’s impact level. Most indicators have numerical values, which may be expressed as a percentage or as a currency value.

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Like other day traders, they may also track economic events that are likely to impact short-term price movement. If you don’t trade the news, you’re missing a great opportunity. Forex market’s biggest profit opportunity is news trading, as it can produce instant profits in a very short period of time. But at the same time, news trading is also very intimidating and many traders avoid to trade the news, exiting positions before major events or moving their stops to break even. Stock trading based on news releases is a strategy used by many long-term investors, as well as short-term traders. If a company has strong balance sheets, cash flows and earnings reports consistently, then a trader may decide to buy and hold the sharefor a longer period of time.

However, we have to warn you that potentially big profits always come hand in hand with bigger risks. Volatility spikes during these periods and prices may move in a disorderly fashion. If you don’t have a solid trading plan for a particular event, it’s better not to engage in any trades at all.

Participating in forex trading presents an opportunity to take part in a global marketplace with significant potential. Due to its popularity with day traders, forex has even gained a reputation for turning quick profits. In truth, it’s just as complex and competitive as any other world marketplace.

Do you have any suggestions or questions regarding this strategy? You can always discuss Forex News Trading Strategy with the fellow Forex traders on the Trading Systems and Strategies forum. The news volatility will most probably trigger one trade’s stop-loss and the other’s take-profit.

  • The Producer Price Index measures the average price of a fixed basket of capital and consumer goods in the wholesale market.
  • If the goal is to make money in a short timeframe, within a couple of days to a couple of weeks, that is, by definition, a swing trade.
  • Here you’ll find what awaits the market this week, from the CPI release to a possible gold plunge.
  • Rating agencies can also influence investor perception of the attractiveness of any underlying bond.
  • Each strategy detailed above has unique benefits and pitfalls.

If a surprise news event is positive enough, it could potentially push the value even higher. The good thing about thecalendaris that ittells you about what to expect. For example, when there is a major earthquake, there are usually impacts to the markets . It is worse because no one can accurately predict when an earthquake will take place. It could also be catastrophic to traders who missed the prediction.

Look at the local news.

Wait for the publication of the chosen release, and then dive into trade according to the plan. But getting the wrong price execution or not getting your stop-loss order is not exciting at all. This is why you need to ensure your broker provides slippage and guaranteed stop-loss orders.


After a news release, you can also place trades based on how the market reacts. You may have read the above and thought that forex news trading requires investors to be glued to the markets around the clock. But that isn’t strictly the case, as there is the opportunity to jump in and out of the market as you please. When you have a forex news trading strategy in the back of your mind, you can keep yourself aware of key news releases and adjust your trading time appropriately.

Learn how to manage day trading risk

Before any announcement, even though you are planning to exit the market quickly, you must analyze the chart. You don’t have any bias as to whether the price will go up or down, hence the name non-directional bias. For example, let’s say that the U.S. unemployment rate is expected to increase. Imagine that last month the unemployment rate was at 8.8% and the consensus for this upcoming report is 9.0%. Sometimes you may get triggered in one direction only to find that you get stopped out because the price quickly reverses in the other direction. Move the surviving position’s stop-loss to breakeven once the paper profit reaches original stop-loss distance.

  • Rates for different currencies may differ on a day-to-day basis.
  • While positive news creates buying opportunities, negative news normally leads to selling pressure, which can create the opportunity togo short.
  • Your stops should be placed approximately 20 pips below and above the breakout points, and your initial targets should be about the same as the range of the breakout levels.
  • Get familiar with the latest Forex trading strategies, develop and improve your trading plan.
  • It measures the number of jobs created in the nonfarm sector in the US in a month.

This is not only the case when the release is in line with analyst expectations, as published by news channels and financial news providers, but also when the release surprised significantly. Sometimes it’s not even possible to predict how volatile the markets reaction will be to the news release. Sometimes the market will move within a range of fifty or more pips in response to data released. Sometimes a 100-pip movements in the span of one or two minutes will be reversed and completely negated by the price action during the rest of the day. When you analyze price movements over such a short time frame, more false signals are bound to appear due to the small sample size and limited context. Spotting a false signal and confirming the validity of your analysis can be tricky—especially when time is of the essence.

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