How To Trade Forex On News Releases And Make Big Profit
The news represents great profit opportunities for Forex traders. Trade Forex on news releases is best strategy to make lot of money.
By news, we mean various economic data releases.
Every major economy regularly publishes statistics like GDP, inflation, unemployment rate, etc. If you trade Forex during the times of these releases, you have a chance to make a lot of money.
In this video, we will get to the bottom of trading on news and economic releases. There are several strategies you may use.
In this video we will tell you in detail how to trade Forex on news releases and make big profit.
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One of the great advantages of trading currencies is that the forex market is open 24 hours a day, five days a week (from Sunday 5 p.m. until Friday 4 p.m. Eastern Time). Since markets move because of news, economic data is often the most important catalyst for short-term movements. This is particularly true in the currency market, which responds not only to United States economic numbers, but also to news from around the world. Here, we look at which economic numbers are released when which data is most relevant to Forex traders, and how traders can act on this market-moving information.
What Are the Key Releases?
When trading news, you first have to know which releases are actually expected that week. Second, knowing which data is important is also key. Generally speaking, the most important information relates to changes in interest rates, inflation, and economic growth, like retail sales, manufacturing, and industrial production:
1. Interest rate decisions
2. Retail sales
3. Inflation (consumer price or producer price)
5. Industrial production
6. Business sentiment surveys
7. Consumer confidence surveys
8. Trade balance
9. Manufacturing sector surveys.
Depending on the current state of the economy, the relative importance of these releases may change. For example, unemployment may be more important this month than trade or interest rate decisions. Therefore, it is important to keep on top of what the market is focusing on at the moment.
How Long Does the Effect Last?
According to a study by Martin D D. Evans and Richard K. Lyons published in the Journal of International Money and Finance (2004), the market could still be absorbing or reacting to news releases hours, if not days, after the numbers are released.
The study found that the effect on returns generally occurs in the first or second day, but the impact does seem to linger until the fourth day. The impact on the flow of buy and sell orders, on the other hand, is still very pronounced on the third day and is observable on the fourth day.
The currency market is particularly prone to short-term movements brought on by the release of economic news from both the US and the rest of the world. If you want to trade news successfully in the forex market, there are several important considerations: knowing when reports are expected, understanding which releases are most important given current economic conditions and, of course, knowing how to trade based on this market-moving data. Do your research and stay on top of economic news and you too can reap the rewards.