Believe it or not, forex news is not just a mechanism to inform the public about what is happening in the world of market trading. Whatever information a foreign exchange or economic news may present, it will register a significant effect on the international economy and the markets. However, it is very difficult to predict in what way a certain news item will influence the interaction that exists between the market forces.
If you have been trading for years, it might be clear to you that there is really no fool-proof way of telling how one should trade based on the news and economic press releases that come out. That’s why many people consider forex trading as a scientific guess work. You can grab hold of as many bits and pieces of forex news as you can but at the end of the day, you will depend on your best judgment in order to come up with a sound prediction or analysis of the situation at hand. But of course, one has to admit that a person who has spent more hours analyzing the news has a greater chance of getting it right.
In the world of foreign exchange market trading, it is not as simple as saying that history will simply repeat itself. The truth is, it is much more complicated than that. Forex news is traded because of the fact that many people are afraid of losing and many people believe in the economic releases. This certain degree of belief is one of the factors that made the market forces uncertain and vulnerable even to the slightest movements of the market forces.
When looking out for the most significant forex news items, one has to remember that awareness of the scheduled news releases will help a lot. Usually, within a span of one week, there are several similar and conflicting news items that will come out. A good trader will know which among the data are important and significant. In general, the following economic press releases can be considered as important: surveys on the manufacturing sector, decisions on interest rates, trade balance, retail sales, consumer and producer price, inflation, surveys on consumer confidence, rate of unemployment, surveys on business sentiments, and data on industrial production.
The hierarchy in terms of importance of the economic press releases can vary from one territory to another. The importance may be dictated by the current economic state and policies that are implemented in the country. Therefore, a good trader who looks into the forex news should take note of the prevailing context at the specified period of time.
News should also be seen as a series of events. For example, the general trend can be broken if a series of bad forex news is immediately followed by a series of good news. With this, you can see how powerful the news can be. News reports can actually result to prolonged trends and conditions in the economy. To emphasize, in order for a trader to stay on track, he or she should always take note of the fact that each news item only presents a small portion of the picture and all information derived from the news should be taken with a grain of salt.