With all the currencies you can choose from, there are at least five to ten economic reports almost every day. Which is also pleasant if you focus on trading news, the timing of important press releases is usually announced in advance, so you can plan when the best times are for you to trade.
You think watching maybe five to ten press releases a day is a lot, but you don't have to track every message, You can choose which one you prefer to work with. There are a small number of key reports, most appear once a month. These crucial reports often cause large spa movements (lots of pips).
In this chapter, I would like to focus on the US- Dollar news and economic news focus, since the US- Dollar is involved in most major currency pairs and thus has a decisive influence on the activities of the FOREX market.
Here is a list of reports that have a big impact on the FOREX market:
- Employment (Unemployment)
- Interest rate decisions (e.B. Interest rate)
- Balances of trade
- Gross domestic product
- Export / Import Payments
- Inflation reports (Consumer Price Index and Producer Price Index)
Each country has a list of reports like this, that are likely to cause volatility. This list can of course be shortened or extended at will., depending on where your preferences lie.
Since the timing of these reports is announced in advance, there are several websites on the Internet with schedules and potential volatility rankings.
News Trading Methods
Straddles – Sliding tackle
Staddles or grits are very easy to handle and you don't have to think much. However, grappling is also one of the riskier methods to trade the news..
For a grit you simply define a limit- Order for a long position a par pips above the market before the news and at the same time define a limit- Order for a short position a few pips below the market.
Does the market show enough volatility, your order is automatically triggered, Your stop and profit goals are also automatically executed when they are reached. It's really easy!
Again, That sounds very simple, but you should be very careful with a method in which both long- as well as short- Orders could be triggered. When profit goals or stops are not properly defined, you can also get out with maximum loss in both directions. You must not lose sight of the risk of hatching.
“Trading the numbers”
This method is preferred by most. Deciding whether a message is worth trading or not, makes the method significantly less risky than grappling.
First, you need to estimate the power of the message that will be published.. Not every message can be used for trading, some news causes little movement in the market or the expected volatility is so crazy that it would be too dangerous to open a position. Ask yourself how he behaved in the past, or in other words, what has influenced the market lately?
The second step is to follow the news and see if the report or economic figures that are currently being released are in line with what is expected in the market.. If the report or the figures are good and / or are a good surprise for a country, then you would go long with this currency. In case of bad news or surprises, go short with this currency.
Example: For the next US- Employment reports are published by the market 200.000 new jobs expected. However, the published number of new jobs is 300.000. This is a surprise to the top, and more jobs signal U.S. strength and growth- Economy. You would go long as soon as the report is released and hope that you get your share of the movement.. Would the figures roughly correspond to what was expected by the market?, this would not create a good trading option.
Something else!
You now know “How” and “When” You can trade with the news. However, there are a few points you should know before you open your first trade using this method..
- While the current figures or reports are responsible for the long-term price development, differences between market expectations and the current report can cause large price fluctuations, creating good trading opportunities for breakout traders. This means, when economic figures or reports are published that are in line with general market expectations, this does not cause major short-term price movements.
- The calmer the market is before a report, the more likely it is to have high volatility afterwards. Let's look at the whole thing from the other side: Is the market quiet, fewer and fewer traders are willing to buy or sell, there may be many waiting for a clue (such as a press release e.g.?). If this notice becomes known:, all traders enter almost at the same time, causing large movements in the market. So, the more traders wait (the quieter the market), the more will get on board according to the press report (lots of pips and a new Ferrari!).
- Depending on the significance of an economic report and the deviation from the current to the forecast figures, breakouts of the price are often very short-term and last only a few minutes or even seconds. Trading with news is therefore more for Scalp- or day trader.
