Understanding Forex Trading News

Understanding Forex Trading News

Even a non trader can tell, just by watching the news, how the financial and forex markets react strongly when certain economic data or news is released. If you want to make the most out of your trading career, it is important that you become familiar with the ins and outs of forex trading news.

The reports that affect the forex are numerous, and the ones that you should follow will depend on the currency pair you are holding. While keeping tabs on the economic and political news that emanate from your currency's country is vital, you should also be aware of the major issues that concern the top forex currencies, as they exert a wide influence over the entire forex.

These include the U.S. Dollar of course, as well as the Euro, the Japanese Yen, the British GBP, the Swiss France and the Australian Dollar. Chances are the forex currency you are holding is actually paired with one of these currencies. Even if they are not, it is still important to keep an eye on them.

Of course the dollar is the most influential of the currencies, and thus,s the trading news that stem from the United States. As a forex trader you need to keep your ears open to the announcements from the Federal Reserve, in particular the interest rates; other points of interest are the GDP, consumer spending, employment and inflation.

All the important trading news, whether in the U.S. or elsewhere have predetermined release dates, so this will allow you to make preparations in advance.

Before you begin trading news however, you should know a little of how it actually influences the forex: long term the effect can be gathered from analysis; the short term, however, is more sudden and sort of "knee jerk".

Depending on how the trade news compares with what the market was expecting, there could be a huge upsurge in prices, or a steep decline (of course if the news matches expectations then there will be little reaction from the forex). However, while this paves the way for a great deal of potential profit, this surge usually last for only a few minutes at most.

Unless you are quick on the trigger and able to perform on the spot decisions, you could end losing a lot of money. Also, your Stop/Loss and Limit Orders may not be executed at the levels you desire because either the prices are moving too fast or the spread too wide.

That being said, it does not mean that one cannot profit from trading news. The best way to approach it from a strategic viewpoint is by taking stock of what issues are affecting the forex market. By making a proper evaluation of the market's concerns, you will be in a more viable spot to conduct forex news trading.

Trading news is not for everyone, but it can be learned through diligent observation and analysis of economic figures and market concerns. Patience to go over the pertinent data will help you make the right and profitable decisions when the time comes.