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Methods to trade the forex news
The two main methods to trade the forex news include:
- Directional bias
- Non-directional bias
Possessing directional bias means that you anticipate the foreign exchange market to move in a particular direction once the forex news report is discharged. When expecting for a trade chance in a particular direction, it is excellent to be familiar with what it is about news reports that make the market to move.
Actual and consensus
Quite a few days or still weeks prior to a forex news report release, there are psychoanalysts that will turn up with some sort of predicting on what numbers will be discharged. This figure will be different in the middle of a variety of analysts, but in common, there will be a familiar number that most of them have the same opinion, and the figure is termed as a consensus. When the news details are made public, the number, which is allotted, is known as the actual figure. “Pay money for the rumors, put up the news for sale” is the general expression employed in the foreign exchange market since frequently it appears that when a forex news report is liberated, the move does not match with what the report would pave you the way to believe.
For instance, let us say that the joblessness rate of the United States is hoped to enhance. Envisage that previous month the joblessness rate was at 7.8% and the consensus for this future report is 8.0%. With a consensus of 8.0%, it means that all the huge market contestants are expecting a weaker United States economy, and consequently, a weaker Dollar. Therefore by means of this hope, huge market contestants are not going to stay until the report is in fact liberated to begin functioning on assuming a position. They will go in front and initiate selling off their dollars for other currencies previous to the genuine number is liberated. Now let us say that the genuine joblessness rate is discharged and as anticipated, it reports 8.0%. As a retail dealer, you observe this and believe “Okay, this is awful news for the United States. It is time to short the dollar!” However, when you set out to your dealing platform to begin selling the dollar, you observe that the markets are not precisely moving in the direction you considered it would. This is for the reason that the huge contestants have previously regulated their positions way prior to the news report still came out and may currently be carrying profits subsequent to the run up to the news incident. Now let us return to this instance, but this instant, visualize that the real report liberated the joblessness rate of 8.0%. The market contestants thought the joblessness rate would rise to 9.0% owing to the agreement, but as an alternative the report confirmed that the rate in fact reduced, displaying the potency for the dollar.
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