It is impossible to take advantage of the forex market because at any time, prices should instantly combine all the information known to the public. Important forex news releases cause huge price fluctuations throughout the day. As a result trading based on news is risky since these rapid prices per share increase and decrease result in large sized changes. Apart from buying securities on the basis of positive news, many traders sell security on the basis of negative news.
The Path of The Forex News
Let us have a look to the path of the information to traders and investors if something big happens. Traders reading or listening to paid forex news get the information first and act if the news gives them indication to trade. Later on, they examine the situation and act little late. Hedge funds, investors do not rush to trade since trading cannot happen within a second. It takes time to calculate the amount and type of assets whose portfolios have to be altered. News spread across the world through print and digital media. As people discuss them they become the news of the day. If one could predict which will be better news to trade, one could make some pips out of the news.
Check the Freshness of The News
Research on the freshness of the news. Companies release old data to get a higher per-share price. Inspite of the fact the product reacts the same way in most of the cases. If the news release is old news, find the date when it was released the last time. Then find a chart including the following time frame and evaluate the reaction of the stock. If the stock rose the security is likely to increase the price and if it dropped then price may decrease.
How Strong is The News?
Determine the strength of the news. Stocks may increase or decrease in terms of price per share suddenly. When trading forex news, it’s better to avoid these price fluctuations through day trading. If the news is strong, the security reacts in a similar way often the next morning. Many day traders buy or sell securities within minutes of the market closing and opening to create small, day profits.
Find the current and past quarterly earnings. A report showing strong or weak earning affects the security price trend per share every month. Many news-based traders trade a company based on significant earning. In expectation of an earnings report date, companies may increase or decrease price per share based on the pessimistic or optimistic behaviour of buyers. If the company decreases rapidly before an earnings date, then the released earnings will be the one better than the previous one, there will be rapid increase in price per share the following weeks. In the same way if the reverse happens than the price per share will decrease over the coming weeks.
Thus wait for the funds to react to the forex news and go ahead for trading. Alternatively, if the news is easy to comprehend and it is huge, you should act immediately. Based on news releases a day trader performs several trades in a day. Day trading provides significant opportunities compared to other segments.
Get a free Forex PDF PLUS:
- 14 Video Lessons
- Free One-on-One Training
- A 5000$ Training Account
- In-House Daily Analysis
- Get FULL ACCESS