The Forex news trade is speculating on how the market will respond to the announcement of important news or the release of market data. Every time important news is published, the market will invariably respond. The question is whether the market will increase or decrease according to the news. Many traders will trade according to their belief in how the market will respond. There is only one question that can be asked about the news exchange. Does the Forex news trade really work?
Most markets will have a slight movement before the announcement of major news events that are regularly scheduled. These events could be the publication of market indicators or unemployment numbers. This is because there will be rumors about how the real numbers will be published. Traders will place a position based on how they think the market will respond if these rumors are true.
The Forex market is open to operate 24 hours a day. Any news announcement in any country during the day or night will have an immediate impact on the currency market. In general, the market will have a slight change just before the announcement of news and then the market will have a major change after the news announcement.
With the Forex news trade, an operator is basically trying to speculate on the impact of the news announcement. There is no doubt that important news announcements can have a profound impact on the Forex market. This is the reason why most Forex traders will try to capitalize on the launch of the main news announcements.
The opposite is that most investors already follow this strategy. Since there are a lot of merchants who invest based on the news, the market responds quickly to the change of the ads. This rapid change in the market limits the ability of merchants to benefit from news announcements. For this reason, many people do not believe that Forex news trading is a plausible strategy.
Unlike other trading strategies, Forex news trading does not require any technical analysis of the market. Since most news announcements occur very rarely, there is no technical analysis model that can explain the introduction of the news. This allows an operator to use objective reasoning to determine how to place their operations immediately before and immediately after the announcement of major news.
Most news announcements have a short-term impact on the Forex market. Very few news announcements will have a long-term impact on the market. With the new announcement with such a short-term impact, traders will seek to move quickly in and out of positions. The impact of the news can be felt only for a day or, sometimes, less. You do not want to have a long-term position if you conduct news-based transactions.
A good strategy to follow when trading Forex news is to place two orders at both ends of the current market price. If the market rises, then you can maintain the order that benefits from the movement and cancel the other order that is below the current market price. This allows you to earn profits regardless of whether the market goes up or down.