The news trading strategy relies on news-based forecasts and analysis, which the trader can rely on to open thoughtful trades before or after the release of the news. The news trading strategy can be viewed as a short-term trading strategy, which depends on exploiting opportunities that appear in the markets coinciding with the release of new economic and financial news, in addition to political news as well. This is because this type of news has a clear impact on currency prices and their volatility in the case of Forex trading, and this is also the case in some other financial markets such as digital currencies, gold or indices.
Despite the importance of relying on technical analysis at all times, people who master the news trading strategy do not care much about conducting technical analysis directly before executing the deal. Rather, they are interested in executing trades based mainly on the signals resulting from the news. As previously mentioned, this news varies in terms of its importance and in terms of its impact, and news trading can take place on a daily basis, but its best results are on days that are crowded with news or those that include important news.
How do you read the news correctly for trading? In order to master trading news reliably, you must invest some time in learning Forex, not just the Forex market, but the impact of different types of financial and political news on certain elements such as the value of currencies. There are a large number of macroeconomic variables that affect the financial market, including the Forex market, stocks, digital currencies, and more, and among the most important of these factors we find:
- Interest rates
- Inflation
- Unemployment
- Economic growth
- Economic results
- Retail results
Trading on the news and how it affects the Forex market
Trading news depends on following a large number of sources at the same time, especially official sources, as relying on non-professional news sites may lead to undesirable adverse results. Every trader can choose the sources he prefers and follow them, but while ensuring accuracy and trust. In addition, official announcements made by countries remain of great importance, perhaps the most important of which are official announcements from the American side, which help in analyzing the dollar in the best possible way, along with official European and Asian announcements.
How does news affect the Forex market? News affects the Forex market in more than one way, including the impact of international official announcements on the strength of currencies, including the example mentioned before. When an announcement is issued regarding the US economy, for example, the US dollar gains strength – that is, its price increases – if this news is positive, and vice versa if the news is negative. The impact is not limited to the Forex market only, but also the digital currency market, for example, is affected, as trading in digital currencies depends on pricing currencies in light of a close correlation with the dollar because it is a risky asset.
There are a group of the most important factors that make the Forex market, and other markets, affected by important financial and economic news:
- The Forex market and other volatile markets are strongly affected by global economic news, and traders can benefit from this on an ongoing basis by evaluating this news and opening thoughtful deals based on the expected effects.
- Tight monetary policies and related news usually tend to strengthen currency pairs, when issued by central banks, of course. While softer policies may contribute more to devaluing and weakening currencies.
Trading on the news? Steps to implement a trading strategy
The steps for implementing a news trading strategy begin by relying on following various types of news and economic indicators. Without a doubt, the correct implementation of this strategy will allow you to achieve excellent profits with practice and continuity. Below we begin her journey on how to implement this strategy in precise and quick steps:
The first step: Identifying the news affecting the currency market. The first step in implementing the news trading strategy in the Forex market lies in determining the type of news that deserves continuous follow-up, which is, of course, the news affecting the currency and Forex market on the one hand, and your trading on the other hand, and the following is We review the most prominent news:
- Interest rate decisions: Central banks use interest rates to control inflation and improve economic growth, but on the other hand, currencies benefit greatly from this, as a positive change in interest rates – by increasing – contributes to increasing the price of the currency and turning it into a profitable currency in the future. Trading.
- Employment reports: Jobs data reflects the strength of the economy and its rapid growth, as the large number of new jobs reflects an improvement in the country’s economic performance, which naturally contributes to increasing the value of the currency, especially in the long term. However, on the other hand, positive job data also hints at a trend The central bank will continue to raise interest rates to reduce inflation, which is another positive factor for traders.
- Gross Domestic Product: The gross domestic product of any economy shows us the extent of the value of the products and services that are produced locally. Accordingly, positive GDP results reflect to us the reality of economic growth
Trading on news and profits
How much can you profit from trading? The first trader uses a high-risk approach, risking 60% of his capital on each trade and targeting a profit of 120%. While the second trader is more conservative and risks only 5% of his account, targeting a profit of 10%. To make the matter simple, let us assume that each trader took the same group of ten trades, and that the second trader of each trade achieved a profit.
Is it possible to trade with $100? Trading with $100 is good if you are a beginner in trading. But before you start, it is important to decide where you will trade, as you can trade with $100 at once, but you can also spread your opportunities by trading in different stocks. If you do not have any trading experience, you can first practice online and then invest $100 to try your chances
How do you trade the news? First: You must quickly analyze the news and find out whether the increase is by half, two-thirds, or double, and then compare the result with the previous month. Second: Entering into a first contract quickly and immediately after analyzing the news, which is in the interest of the news. Third: You must expect the news to bounce back and have a plan to cover this rebound according to the market exhaustion strategy
