Why It is Important to Get the Latest Forex News
News has a major impact on the performance of forex markets. It is difficult to know how the markets will react to any piece of news, but it is good to be prepared. Fear is one of the reasons why news affects the markets so significantly. One piece of forex news can send investors panicking and lead to huge losses within a very short time. Seasoned traders have learnt how the markets are likely to respond to any type of news without panicking. Most of the news items that break out in the market are “noise” that do not warrant any panic moves.
The most important forex news you should watch for as an investor are those that influence the economy directly. A series of ‘bad’ or ‘good’ news coming one after another can change the direction of a trend in the forex market. For a trader who makes decisions based on the news, it is important to try and get the big picture. If you just concentrate on what is in front, you may miss the larger picture and find yourself trading against the larger trend.
Forex prices are know to fluctuate just before and after one of the world’s major economies releases its economic data. There are also times when forex prices swing in a volatile manner following natural disasters like earthquakes or tsunamis, or political unrest. This means that forex traders have to stay up to date with current events and be able to interpret them appropriately in relation to the currency markets. News has been known to cause currency pairs to move 60 to 100 pips in less than an hour.
With news having such an impact on currency markets, it is advisable to subscribe to a reliable forex news signal provider so that you are able to take advantage of the big pips during massive buy/sell rallies. The major forex brokerage firms provide forex news signal trading services for a fee. Subscribing to these services will provide you with expert analysis on how to trade in relation to the news as it comes in.
How to trade using forex news
First, you need to find a reputable forex news site that provides a comprehensive daily, weekly and monthly economic calendar. Ensure you configure the time zone to match with where you are living so that you are not a few hours behind or ahead when news breaks out.
Second, you need to pay close attention to the specific countries you are trading with. The U.S. dollar is the world’s reserve currency and most of the major currencies are pegged on it. Therefore, any news related to the U.S. is important since it will have an effect on most currencies being traded. In recent times, the Chinese economy has risen to become a close second to the U.S economy on the world stage. China is a having a huge impact on the world economy and markets so news from there also needs to be monitored closely.
The best time to trade forex news
You should be watching the news very carefully a few hours before a planned economic news release. There are usually many rumors during this period and traders will start taking sides on a particular currency. This will drive up the prices and create a massive build up until the time the news is released. If the news turns out not to be what traders anticipated, there will be a massive sell-off and a reversal pattern that completely counters the previous build up that occurred hours before the news release. These reversal patterns usually last about an hour and the currency goes back to where it was before the build up to the news release. If the news turns out as anticipated, there will not be much action as before its release. Instead, there will be a consolidation or leveling of the trend on the chart.