Trading | 3 months ago
Economic data and financial news drive the foreign exchange or Currency market. Currency market responds to all economic news and reports from the major economies including United States, European Union, United Kingdom and Japan. In this article we will discuss how to trade forex around news reports as they offer limited risk and high reward.
Why trade forex after a news release?
Trading forex after a news is extremely important as volatility increases during these periods which presents a great profit opportunity for forex traders. However, a solid trading strategy is needed to cash the opportunity.
Which news reports should be used for trading?
Latest news reports including an important informational data regarding the economy should be used for trading. This informational data may include interest rate decisions, unemployment reports, economic growth data like retail sales and industrial production etc.
Which currency pairs should be traded after news reports?
Lot of news regarding the economic data are released every weekday (except holidays). Most liquid currency pairs including EUR/USD, USD/JPY and GBP/USD which represents the currencies from major economies should be considered for trading after news reports.
How to trade forex after news release?
A trader should understand the market sentiment in the relation to the news release. Trader should open position in a currency pair according to the direction of this sentiment. Breakout trading strategy is most widely used to trade forex on the back of the news reports. Trade Global Market provides you an online economic calendar which provides important economic data releases in an automatic way. You can visit this economic calendar by clicking here.
When to avoid trading forex after news release?
No doubt that News release and economic data reports presents great profit opportunities for forex traders, but the reactions to these reports can be unexpected which may result in volatility spikes. During the volatility spikes, price may move in disorderly fashion hitting multiple stop loss. Therefore, a solid trading strategy is needed to trade the news reports. One should avoid trading forex on the back of news reports if they do not have a solid trading strategy for that event.
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