You may already know that any financial market is sensitive to certain news announcements. This is particularly true with the Forex market. Some people try to trade the news to capture quick profits. This is not the way to go for the vast majority of people. In fact, you shouldn’t attempt it at all if you are a beginner trader.
Professional Forex traders always know what’s happening with certain news events. It’s critical for the success of their trading efforts. You too need to be aware of these events to guard yourself against quick volatile price movements. More often than not, it will trigger your stop loss order prematurely.
News announcements to watch are interest rates changes, political speeches, non-farm payroll, housing, and retail sales. These need to be watched for the currency pair countries you are trading.
Making Money with News Announcements
On the other side of the coin, there are a few traders that love news events. They use the volatility they cause to make quick profits. It’s not uncommon to grab 50 to 100 pips in minutes using this technique.
This is a very risky way to trade. It’s a high pressure adrenaline rush. It should definitely be avoided if you are new to trading. Don’t get sucked into the idea of capturing big profits quickly. You can lose big amounts of money just as fast if you don’t know what you are doing.
Don’t worry, there are other ways to make great profits in a short period of time that aren’t as risky as market news trading.
A Better Method to Trade the Forex
Swing trading is a term used to define trades that last anywhere from 1 hour to a couple of days. This type of trading tries to uncover points where price is about to swing in a different direction. This is the best way to trade the Forex market.
Currency pairs trend very well. If you find a swing point, you will more often than not be able to ride price a long ways as it trends.
Swing trading is easier to predict than Forex market news trading. You can use powerful automatic trading software to pick out swing points for you. It will do the analysis and tell you when to trade. Some are designed to avoid news releases as well.
Now it’s time to start putting these ideas to work. Avoid doing Forex market news trading as it’s not worth it. Instead, get the basics of the Forex down first and set up a demo account. Test out some automatic trading software and start trading!