The Challenge of Forex Trading the News
December 22, 2009 by Tracy Bernardo
Filed under Forex Trading
Its an indisputable fact that forex trading while using up-to-date financial news can increase your odds of executing winning trades. These can be anything from universal events to economic releases to financials for many of the world’s largest companies. You will need to know when something changes in the financial markets that upsets worldwide currency prices. Its a bit of an enigma to realize that something as minimal as a high profile trial on an entirely different continent may shift the value of the greenback.
You of course don’t want to base your forex trading on a shot in the dark. Very few have the skill to predict future news, except for maybe those that are making it happen. You’ll find few volunteers that are willing to spend endless hours digesting statistics just to determine what’s contained on the pages of the next financial report. If you could muster that, you could see an advantage in your forex trading over those who were not into making the additional effort. While some may feel that every tidbit of data is worth analyzing, the majority of forex traders out there are not interested in wasting time sifting through data that may have no influence on the foreign currency market at all. Trading on the basis of fundamentals is probably the favorite of choice of most forex traders.
Technical analysis is a bit less dry than fundamental analysis, but still can be daunting when having to study charts and indicators in an effort to find predictable price movements. Most large traders rely on this type of analysis, but they also spend a lot of time watching what is happening in the news. If your not an economics expert, or even a moderate professional in economics, your best bet is to be constantly in tune with the forex trading news calendar that provides you with the important events that take place each day. Its surprising how some announcement or news article from a half a continent away can turn your perfect trading day into a train wreck. It usually doesn’t pay to be involved with the forex market during these erratic price movements.
There is always something taking place somewhere in the world today that can affect currency prices. There is always something stirring with differences in time regions, global markets and many foreign currencies on the move, that the currency market is continually fluid. While some of these incidents are more serious than the other, they all have influence in trading on the forex market.
The US dollar players a prominent part in the forex market, so you must keep an watchful eye on any major announcement in the US that can send ripples through the currency markets worldwide. Even a currency pair like EUR/GBP could be affected by a news event in the US. The dollar continues to guide 25 other denominations of currency simply by its own value. Most of the transactions around the world involve the US dollar.
There are other countries that are similarly as critical in currency trading as the US. You may be trading a specific currency pair like EUR/GBP or EUR/JPY that will widen the spectrum of news you need to watch. In this case you would have to keep abreast of news and important announcements in Europe, Japan, Britain and the US. That’s a lot of news to monitor for trading only two pairs of currency. When you concentrate on a single currency pair and the information that influences it, you can avoid dealing with the overflow of news and event that you wouldn’t have enough time for anyway.
We’re lucky we live in a day and age in which technology is so prevalent. Most forex brokers provide excellent news alerts, economic calendars and other technology advances that allow us to trade from one platform and be able to monitor news from around the world. While you can easily find many of these resources around the web, there is no substitution for having them quickly available to you from your forex brokers software panel. Its a good bet that your forex broker has a forex calendar installed inside your forex account in which you can view the latest bulletins that can change the direction of the forex market once they take place. Many of these calendars are transferable to your local desktop calendar. There are many services that have the ability to send important financial alerts to your pc in real time.
Since your major focus is currency trading, you don’t want to get caught up in reading multiple blogs, forums and news sites. It can have addictive effect, so don’t let it become commonplace and divert you from fx trading. Basing your next forex trade on financial messages can be time consuming, but with the latest technology you should be able to find a multitude of systems to manipulate your time and allow yourself to get back to the crucial business of the day – currency trading.
Foreign currency trading can be quite risky unless you’re setup to monitor and react to world events that will keep your trades positive. Make sure you check out Duncan Craig’s first-rate report on forex trading news, while successfully utilizing the many resources you have available to you as a trader.
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