The Importance Of News In Forex Trading
I agree with the majority of that. I would however like to note that true technicians understand that the news is inherently embedded within the price action. Price is key, it always has been. And actions speak louder than words. If the reaction in price doesn't necessarily match expectation and spoken rhetoric, then there is a reason why. The majority of trading is due to reaction of events and not anticipation. But the greatest amount of profitability often lies in the anticipatory trades.
Also, keeping abreast of the macro-economic happenings will usually keep you on the right side of the larger trend at hand. So if you are trading because of these larger moves, don't allow yourself to get caught up in short-term minutia/noise. And while being late in short-term trends is often dangerous, but in larger time frames and trends, it may prove to be more useful (conservative). Just make sure your trading and viewpoints are congruent. If you easily get caught up in the daily/weekly data readings, don't expect to trade longer-term without a bumpy and often troublesome ride.
News watch
Before entering a trade do you watch a website with the latest news (fundementals) or do you trade only on chart (technical).
And which site do you prefer?
Market Overview
The expectation of last week’s meeting of the Federal Open Market Committee (FOMC) was enormous, however once more it seems as though the dovish influence on the committee have been underestimated. In focusing on “international developments” the market will take this to be a focus on the China growth story which continues to slowdown. In the past few weeks the economic data from China has been deteriorating and this destabilising factor on global markets has prevented the Fed from firing the gun on a tightening of its monetary policy. This now means that the pressure will be ratcheted up on how traders will react to data out of China and the US. Is China still slowing down and what is the spill over into the US economy? These issues will be debated now and this week there is some key data out of both economies that will help to add detail to that picture. The one key data release to watch for this week is China related, however, that does not mean to say that US data will also not be poured over as we continue to get releases of this month’s key housing data.
Forex markets have taken a cue from the FOMC decision and the dust is continuing to settle. The outlook on key majors have improved, but how sustainable is this view and will the bulls be able to make a breakout. We take a look at the technical outlook on Euro/Dollar and also how the recent market volatility is impacting on a key commodity currency, the Aussie dollar.
In equity markets there has been a considerable impact on trading sentiment in the wake of the Federal Reserve’s decision. The moves on equities may have comes as a bit of a surprise in response to a dovish FOMC meeting, however the impact on key European markets such as the DAX and the FTSE 100 have been significant. What could be the market that is hit the most? We do the technical analysis of these key markets and what the crucial levels to watch will be.
Commodity markets have been a real trigger for market sentiment in the past few weeks, and seems set to continue with such crucial economic data announcements, whilst focus remains on US Treasury yields as traders come to terms with the Fed’s reasons for not hiking interest rates.
Forex markets remain the same and there isn’t any significant move for the day. Tomorrow is going to in an interesting day in the Forex markets.
If you are using news from your broker then you might be on a wrong path
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If someone wants to succeed as a forex trader, it is important to be informed about the international economic and political developments. Being informed about what is happening through the world and especially in all of the major economic and political powers will help you take advantage of investing opportunities or avoid risky situations.
You do not have to predict the effect of the news in the forex market. You should just stay alert when economic reports and major events taking place and stay away of the market during these times. Even if you are using only technical indicators & graphs and you do not care about the fundamentals behind a currency pair you should not ignore the news and especially the time of news announcement.
Considering the different time zones that are involved in the various forex trading sessions around the globe, you will find that something is happening virtually 24 hours a day. Nevertheless, you should focus on the regular announcements and reports in the countries that are of most interest to you.
For instance, if you trade only the EUR/USD pair you should focus on news and events that taking place in Europe and USA. News from other countries will still affect the rate of EUR/USD pair eventually, however, not with such a fast and devastating impact on your trading.
Virtually anything that has an effect on the US economy will affect all the currency pairs in the forex market since the US dollar has the highest traded volume of any currency. So something like a drawback in the US housing market, which might not seem to affect the forex market directly, it actually does.
Economic reports and news is the primary attention but political events and news will have an impact too. For example the election of a new government will influence currency values based on whether the markets believe that the new governance is likely to take the country into a better economic position or not.
In the previous decades it might was difficult to keep yourself informed with everything that was happening around the globe. Today thanks to the internet, you can easily get informed in a matter of seconds about what is happening in every corner of the planet and affects the forex market. Actually, it is so easy to keep up with news and events around the globe that you may possibly end up wasting too much time just checking out each of the online financial websites, blogs and newspapers.
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