Forex News Events to Trade are news releases that have potential to move almost most of market currency pairs.
Not all news is worth trading.
Just like the technicals define the market direction, News events make markets move.
News can affect the way you perceive things or make decisions.
Traders normally depend on news events report release as they anticipate what’s likely to happen in the market.
This is because it’s the news that moves market.
During news release,
Market price moves strongly up and down in the market due to high volatility.
At this point some traders panic to close their positions as others rush to make money within a shortest time possible.
The news speed up reaction in the market by making prices move very fast
Now that you are here we shall take you through some of the news data release that are worth giving your attention and how to trade them.
Which news should I trade for forex
As earlier mentioned, Not all news is worth trading!!
Some just cause noise in the market for just 3-10 min and then things become normal again.
Or sometimes nothing happens at all.
You should look at news that has the potential to move almost most of the market currency pairs.
Ideally, at the release of such important events like a country’s interest rate, un employment rates, the market makes a very big movement in relation to the effect of the news.
Major forex news events to trade include;
- interest rates;
- Non Farm payrolls (NFP)
- FOMC
- Consumer Price index (CPI)
- Employment and unemployment rates
- Gross Domestic Product(GDP)
- Trade balances
- Crude oil inventories
- Purchasing Manager Index (PMI).
In addition, News release from the USA mostly affect the market compared to other economies.
This because the U.S has the largest Forex market economy and most pairs depend on the US dollar.
The US dollar is also considered the worlds reserve currency. Any change in the U.S economy shakes the Forex market and causes a lot of volatility.
Also most commodities are pegged to the U.S. dollar. So all transactions for commodity goods, gold and Oil are exchanged with the U.S.dollar.
How do you know the news impact on the market reading the economic calendar
Some news are more volatile than the other.
More volatile news cause large price movements in the market and may lead to change in the market trend.
Less volatile news may cause small changes or nothing at all.
On the economic Calendar,
More volatile news is dotted with three stars, medium; two star and less volatile with one.
Below is a table showing some of the common forex news events to trade and the level of volatility.
The most volatile news are indicated with the 3 stars , moderate volatile with 2 stars and the less volatile with 1 star.
The most volatile news is likely to last for long in the market and can lead to a trend reversal.
Moderate volatile news hold it for a while and may be can lead to a retracement.
It may last for an hour and then the market gets back to its main trend.
Some of the other news that need to be attended to in case they are up are the political and geographical news such as political unrest, change in government regime, elections, war and natural calamities, pandemics.
Apparently, the year 2020,
The whole world has been hit by the Pandemic COVID- 19. This has caused the shut down of many economic activities.
It has increased unemployment rate, closure of international movements and the slow growth in most economies.
Most economies will struggle for sometime and this has highly affected the Forex market as well.
These rarely happen.
But when they do may cause a great deal to the economy and the Forex market too.
The related importance of these news release may change depending on the current state of the economy.
What currency pairs to trade during news release
Mostly, i would advise to look at pairs, paired with the U.S.dollar.
The U.S. economy is mostly watched by most traders. We saw some the reasons why!!
It is the largest economy in the world and the U.S. dollar is the world’s reserve currency.
Most commodity goods are priced on the dollar and some countries still peg their currencies to the U.S. dollar.
For example; Australian dollar, Canadian dollar, and the New Zealand dollar.
In fact, the major forex news events to trade mainly affect the major currency pairs.
These currency pairs will also react differently to news depending on the traders reactions.
- EUR/USD
- GBP/USD
- USD/JPY
- USD/CHF
- USD/CAD
- AUD/USD
The EUR/USD, will appear more volatile during the release of an economic news from the United States than NZD/USD, because EUR/USD is mostly traded on the market.
You can watch out for other currency pairs when news release like Unemployment rate, interest rate adjustments is out from the respective economies.
One more important thing to note is that, during this period, some pairs tend to have large spreads compared to others.
More liquid currency pairs are less affected.
These include the major currency pairs.
Why trade news.
At the release of important news, traders always expect big movements in the markets.
This is the time you just warm up to make extra dollars in a shortest time possible.
During the news release , most traders are anxiously waiting for how big the news may move the market.
Price spikes up and down and makes the strongest moves.
The news really does move the market. It quickens up price movement so fast just like a catalyst.
With a good strategy, you can retire after just a single trade.
However, Trading news is harder than it may sound.
You can make money and at the same time you can lose all the money you worked hard to earn.
It is possible that way.
The bad side of trading news
During news release time, some brokers increase spreads and slippages are likely to occur due to high volatility.
This makes delay in execution of some of the orders and stops are likely to shift.
Therefore, as you look forward to trading news, you have to be more extra careful because trading news is like sitting on a double edged sword.
The same way it can make you money is the same way you can lose it.
It is a common thing that makes traders blow their accounts in just a single trade in a few minutes.
This is because when it comes to news it is so tempting that you get more greedy and forget the rules of your trading plan.
When a trade goes a against you , fear raises in you and with an attempt to try recovering your loss, you take another position but in the opposite direction of the trade.
The market reverses again taking the opposite direction and sweeps you off your feet.
You only realize that when you receive a margin call that your account balance is insufficient.
We are not trying to scare you but when it comes to trading news you are either in or out.
As you plan to achieve a million dollar, think a bout it again.
Develop a strategy for trading news so that you are able to know when to cut your losses in case the market goes against you.
Just keep your discipline whether news or no news and trade following your rules.
Therefore, as you look out for forex news events to trade, choose news that cause volatility to the market. Also trade currency pairs with less spread. Manage your risk always!!!
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