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Trade the News With a Winning Strategy

Trade the news with a winning strategy

It is critical for currency traders to understand and follow the best forex trading techniques. In order to generate profits from trade, traders should focus on ending trading losses and achieving better-recommended results. Any trading strategy which leads you toward a higher goal will have a significant win. Ultimately the most suitable forex trading strategy cannot be given as a one size fits all. Traders who can make a profit should be aware based on their own trading style and risk tolerance.

Forex trading has many strategies to trade. News trading is one of the most popular strategies. By using news, we can make a profit with a short time for the volatility of the forex market. There is much news in the forex market. Major news creates more volatility. Minor news does not create volatility as major news does. The main factor of news is the real data of the news. The real data show what happened in the market. It is impact positive or negative for the currency pair. which way the market drive by the data release depends upon real data of news.

News traders always try to predict the move of the market when the real data is released. If the market moves in the opposite direction of the real data then traders lose money. The market did not react to the data. It depends upon the market maker’s involvement what they think by the release of real data. So, It is very important to learn how to use the news to predict market movement.

Major news

To trade news, It is very important to know which are major news. Major news impacts the forex market to move 50pips to 120pips for a pair. The market is more volatile by the release of major news. SO, at first focus on the major news. Major news are-

  • CPI
  • PPI
  • PMI
  • Retail Sell
  • Unemployment rate
  • NFP
  • Interest rate

For the US economy, the news is very important than other countries. When this news release then the forex market reacts by the news. News is correlation to each other to predict what real data is released. If PPI is bad then CPI is also bad. If retail sales data is bad then PMI data may be bad. If the Unemployment rate decreases then it is time to decrease the interest rate. News data impacts the market in a short time by real data release in real-time. But long term news does not impact the short term news. Long-term news shows the economic growth and strong economic condition. In the short term, the market may be reacting by the news data it may change the direction of market movement. In the short term the news impacts more than two to four day. So, it depends upon us how to trade to use news on a long-term or short-term basis.

Minor news

Minor news affects market movement with very low volatility. Minor news is not important to focus on trade.  Minor news is not real news, it influences major news. Minor news is the sum of major news. If we ignore minor news to trade then it is not a problem to trade. Major news is a real driver of the forex market. Minor news is

  1. Trade balance
  2.  Durable good orders
  3. Personal spending
  4. Manufacturing PMI
  5. Industrial production

Minor news is initial data of economical factor for a country. But the real picture of minor news is represented by major news. Minor news is a micro economical factor of an economy. The growth of an economy is shown by microeconomic factor. The data at first start to microeconomic factor and end in the major economic factor. So, we can predict major news by the calculation of minor news. It is not important to trade minor news. We just watch and predict what real data of major news maybe release.

Consensus  vs Actual number

When news data release before a news report, it may be a day or week. Economists or analysts forecast what the real data will be released. The real data vary from analyst to analyst.S0, most of the economists or analysts talk about the real data may be released, this number is called consensus.

The number which is released in real-time is called the actual number. The market reacts with real data. But consensus data is only a prediction. When the real data is the same as actual data then the market most of the time did not move because already the trader knew the number. But when the real data and consensus data are different then the market direction is changed. Some traders think the economy is bad because the real data is low then consensus data. So, selling pressure may lower the currency value. Other trades think in the short term the data may be below but in the long term economy covers quickly and they react by pressure to the market. For the situation, the market goes both of the direction as a result the market is unstable. News trading is very risky to trade if we do not catch the market pulse.

Bottom line

If we want to trade in news then at first we need to confirm the direction of the market movement. In the short term, volatility is very dangerous for us to win in the market. All news are not reacting in the same way as other news. Confirmation is needed to trade to news trade. What do we think when news data realize it is not important. The important matter is how the market reacts for the news release. Without the experience of news trading it is very difficult to make a profit from the news. So, get more knowledge and experience to trade in news releases.

As a beginner trade it is necessary to avoid news trade. Try to predict market conditions for the news release and practice to catch the market movement. To get more experience is a solid foundation for a news trade. Huge profit or loss will be made by the news trade. So, news trading is risky but we have experience in news trading then it is more profitable.