What do you expect a trader who performs trading the news? By operating in foreign exchange markets, it is sought that news or reports cause great volatility in the short term and those who take positions, expect to get good results from the initial impact and exit when the effects of the news begin to Lose strength.
The first thing we have to keep in mind is that economic news is what generates that volatility in the short term and most of them come from the United States. This is because as the world’s main economy, the U.S. currency participates in 90% of Forex market operations.
Inflation data and Central bank announcements – the US Federal reserve – are the ones that cause strong volatility in the currency market. But it is also important to pay close attention to geopolitical news, wars or attacks, natural disasters and all those that cause abrupt changes in the economy of a country or a region.
Data on job creation in the United States, reports on retail sales, the results of the trade balance and the various announcements of the FED authorities should be considered because they will surely have a strong impact on the Forex market.
Trading the news and currency pairs
With the internet as an ally, we can count more or less in real time with a detailed analysis of the possible impact that each of the economic news will have, this we can find in a series of specialized publications and if we are accompanied by a good Calendar of economic events, we will be able to take positions in the Forex market quickly.
Remember that we are operating with currency pairs and if we seek to operate in the short term with news that cause significant volatility, we must choose those pairs that have good liquidity, otherwise we will be assuming some risks Unnecessary.
Likewise, when volatility grows, so do the spreads that you will have to pay, so it is important that you like the tip of the pen and choose pairs whose spread increase does not end up eating your possible gains. More liquidity pairs are those that will have a lower spread.
Finally let’s say that when you use a trading the news strategy you should try to identify how long the impact of a story can last so you can get out of the position at the right time. We will continue to offer you small tips to use the news in the Forex market.