Forex news analysis is a lucrative strategy for many traders. For such an approach to bring good income, you need to know what news you should pay attention to and what information you can skip.
We want to offer you some recommendations that will help you trade more efficiently.
1. We want to repeat right away: pay attention only to important events. Highlight the key events that influence the Forex market.
2. If you pay attention to the news by state, our advice is to trade on currency pairs: GBP / USD and USD / JPY.
If the news is of global importance, it is better to choose a pair such as EUR / USD. It is worth noting that the GBP / USD and EUR / USD currency pairs should be selected when key events are in Europe or the UK, and not just in the United States.
If events related to Canada, New Zealand, or Australia, the choice of currency pairs should be made from USD / CAD, NZD / USD, and AUD / USD.
3. The economic calendar of the trader plays an important role in trading in the forex market. Try to make a habit, print it every Monday, and always be in front of your eyes. The economic calendar can be found on almost any brokerage website.
4. Remember to check the time! Namely, the time in the trading platform and the time for news output. Consider weekends and holidays, such as the New Year period.
5. If you expect a breakdown, then you need to put a stop on buying and selling. Of course, the distance between them will vary. It is advisable to put a take-profit on one hundred pips or not at all.
As for the stop-loss: if the volume is large, you need to put a closer stop-loss. This is necessary so that losses are minimal. You need to understand that the volume of transactions depends on the degree of importance of the event.
6. Remember, the more critical the news, the larger the lot. If the news is fragile, then the lot will be minimal.
Advantages and Disadvantages of trading on the news
The advantage of trading on the news is that there are always large deposits, which means that the volumes are large.
Therefore, trading, according to such data, will bring higher profits. Trading news takes a little time. You can make a profit in just 30 minutes.
The disadvantages include the fact that during the news, some forex brokers like to increase the spread. This means that the trader does not make a full profit.
It is also worth noting that there is a possibility that the price will move in one direction and then in the opposite. This causes uncertainty, and the chance of profit decreases. If you want to trade on the news, there are a few points you should consider. Reading and analyzing the news correctly will make your trading profitable.
New to Forex trading? Don’t miss these beginner guides from FXCC.