In the Forex market, there are only two ways of trading, the fundamental and the technical. The technical trading approach is characterized by watching and monitoring of Forex charts. Tools such as moving average and indicators such as fibonacci studies and trendline analysis are used to do this. Fundamental trading on the other hand involves watching and monitoring news and events. This is the overall principle of Forex news and event trading. Trading Forex news and events is by far one of the most profitable strategies that a trader can use to make massive profits in a short time span. As compared to technical trading, this approach is considered less risky. There are various news and events that a news trader should watch to remain profitable. Here are some of them.
1. News about US dollar
A news trader must keenly follow news that involves US dollar so as to remain profitable in the market. Forex trading and the market as a whole is greatly influenced by US dollar. This fact is well known by most traders including the technical traders. News about US dollar is keenly followed and watched by many participants in the Forex market so as to take any slight advantage to make profits and also avoid downfalls. There are hot announcements involving US dollar which are released every month.
2. Employment reports
Employment report is released regularly every month on a Friday. To be successful with news and event trading, this is a very hot announcement to keenly watch and follow. The employment has direct impact on the US dollar and this shows its importance for trading news. We have illustrated the impact that US dollar has in the Forex market. Any other item that affects the US dollar also affects the market in general. Massive moves in the currency prices are expected when large numbers miss employment. However, you need to be careful because the effect happens for a short duration.
3. International trade
International trade is another very important announcement that you should be keenly following. There are two major reasons why the news about internal trade is very important. First, it influences both the economic strength and growth of US dollar. This allows it to also to dictate the movement of other currency prices because of the US dollar influence. Secondly, international trade news is a strong measure of trade-centric economies e.g. for the Japan.
4. Trade balance
In the Forex market, there are significant effects and impacts that news about trade balance causes to currency prices. This is because a country’s trade balance also influences the strength of its currency and the economy in general. For example, if an economy is importing more than what their export to their trade partner, the good would be paid by the local currency which further weakens it. In the Forex market, this would lead to a weaker position for the particular currency pair.
Conclusion
Trading Forex news, or the fundamental trading is very profitable but only if you understand how to use the global news and events that affects the Forex market. There are many other news and events to watch apart from what has been discussed above. For a news trader to be successful, he must keenly watch two kinds of news; news that are causing predictable reactions and those moving the market.
Besides global news and also events, you should also search for more information regarding foreign exchange brokers that you want to do business with from trustworthy sources, checkout RoboForex review and a review of Exness broker to discover the details regarding some of the most reliable online fx brokers. Also be sure you always update the information regarding forex currency trading to get newer and more effective tactics, visit swing trading strategy to learn some new techniques to improve your trading revenue.
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Posted under Currency FOREX, Options, Stocks
This post was written by LinkVineAuth on December 18, 2011
