When a certain news item comes out, the market tends to shift. Trading forex news is one easy way to make money. The news influences the way that the market moves. And predicting how the market would move in response to that particular news becomes your job. The news that you should focus are the ones that directly affects the two currencies that youre dealing with. Be sure that you always watch the news at that critical time when the press releases first hit the media. US market news is usually released from 8:30 to 10:00am. If youre dealing with the Yen as currency its partner, be sure to watch the Japanese evening news normally delivered at 6:50 to 11:30pm.
What to Watch for in the News
When watching the news, what are the particular things that you should watch out for? There are many triggers, actually. But one of the few things that could affect the market are news about changes in the interest rate, inflation, trade balance, unemployment, retail sales, and industrial production. News indicating the result of certain surveys could affect the way the market behaves as well. Be sure to watch out for them too. Research firms usually conduct market surveys to determine the sentiment and the current conditions of the business sector, the consumers, and the manufacturers.
How to Trade Forex News
There are two ways to trade Forex news and these are the directional bias strategy and the non-directional bias strategy. The directional bias tells traders to buy rumors and sell news. Days before a particular news comes out, there will be market speculations. Many traders buy according to these speculations. However, when the actual news item comes out and the accurate figures are released, thats when they sell. This strategy is called the directional bias strategy.
The non-directional bias strategy pertains to merely focusing on the essence of the big news. When the big news hit, you wont make or base your decisions on the speculations. You simply buy depending on the news, without considering whether the market price will go up or down. The reason why the strategy is called non-directional bias is because youll be putting your money on both sides of the trade. This way, whichever direction the market moves, youve got investments in both places.
While trading news is a lucrative way to earn with Forex trading, there are dangers associated with it too. Always keep in mind that the market can get very volatile. Widening your spread could hurt your investments in the long run. Also, theres the possibility of getting locked out. And being locked out means you have executed your trade at the right time but the system failed to show it up until after a few minutes. When this happens, it becomes impossible for you to make changes once the trade starts moving against you. Trading Forex news definitely requires practice and experience.
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