Forex for a trader
Forex important news

Forex important newsWhich News Releases Should I Trade? Before we even look at strategies for trading news events, we have to look at which news events are even worth trading . Remember that we are trading the news because of its ability to increase volatility in the short term, so naturally, we would like to only trade news that has the best forex market moving potential. The reason is that the U. S. has the largest economy in the world and the U. S. Dollar is the world’s reserve currency . With that said, let’s take a look at some of the most volatile news for the U. S. In addition to inflation reports and central bank talks, you should also pay attention to geopolitical news such as war, natural disasters, political unrest, and elections. Although these may not have as big an impact as the other news, it’s still worth paying attention to them. When our economic guru Forex Gump is in a good mood, he usually releases an article on upcoming news reports that you can play and with trade strategies to boot! Check out some of his articles of this sort: Also, keep an eye on moves in the stock market . There are times where sentiment in the equity markets will be the precursor to major moves in the forex market. Now that we know which news events make the most moves, our next step is to determine which currency pairs are worth trading. Because news can bring increased volatility in the forex market (and more trading opportunities), it is important that we trade currencies that are liquid. Liquid currency pairs give us a reassurance that our orders will be executed smoothly and without any “hiccups”. Did you notice anything here? That’s right! These are all major currency pairs ! Since spreads widen when news reports come out, it makes sense to stick with those pairs that have the tightest spreads to begin with.

Now that we know which news events and currency pairs to trade, let’s take a look at some approaches to trading the news. One of the ways in which traders can make profits when trading forex is by using economic news and data releases. This is because news moves markets. This is particularly true in the case of the forex market as currencies are seen as confidence indicators for countries. Further, forex is traded using leverage. As a result, even a small change can be made use of to create larger profits. Actually, economic news and data releases reveal fresh information on the current economic condition of a country. Depending on the degree of surprise the data or news causes, the market will react for just a few minutes or hours. Sometimes, the reaction lasts for many days. It is exciting to trade currencies at the time of release of economic data and news, but the volatility experienced during these times could pose a great deal of risk. However, all news and data releases do not cause the currency market to react in the same manner. Therefore, key aspect of trading currencies is knowing which news moves the market and which ones do not move the market. For example, taking currency positions ahead of the release of the U. S. wholesale inventories data is meaningless. This is because this information does not cause any impact on the condition of the U. S. economy.

This data also does not impact the U. S. dollar. On the other hand, the Non-farm Payrolls news release moves the market in a big way. This is because job growth throws light on consumer spending, which is a key indicator of the current status of an economy. Traders who are new to the forex market may find it difficult initially to predict the impact of a news or data release. As they gain more experience, they will become better. Providers of websites for trading forex often include the economic calendar, giving indications as to whether the impact of a data or news will be high, low or medium. Five of the economic news and data releases that can potentially create significant movements in the forex market and are worth trading are discussed below. #1: Purchasing Managers’ Index (PMI) Manufacturing. The PMI gives an indication about the health of a country’s manufacturing sector. France’s and Germany’s PMIs are leading indicators as far as Europe is concerned. These data are released on the same day with a slight time delay between releases.

There is some kind of a correlation between the two PMIs and German PMI is more important. China’s Manufacturing PMI is also worth trading as it has a huge impact on risky currency pairs such as AUDUSD and EURUSD. #2: Gross Domestic Product (GDP) Reports. GDP represents the monetary value of all of the finished goods as well as services produced within the borders of a country within a specified time period. Therefore, the release of the GDP report of a country assumes a great deal of importance. It has a big impact on the currency market. GDP reports are generally released every quarter. Canada releases a GDP report every month. The US releases 3 reports – Preliminary, Advanced and Final. The forex market is impacted the most when the Advanced GDP report is released. #3: Monthly Employment Reports. In the U. S., the most awaited reports are the Non-farm Payrolls (NFP) employment change and the jobless reports. The ADP Employment Report, which provides an estimate, is released two days before the date of release of these official data.

It also has an impact on the forex market, but the deviation from the estimates has to be significant for the mood of the financial markets to change. Unemployment reports from Europe and Australia are also closely watched by traders. #4: Interest Rates Decisions. Interest rate decisions cause volatility in the forex market only when the decisions differ from the market expectations. In general, the biggest trends are after the official release of the data following press conferences, which are translated made available live on the Internet. Traders also look for clues from the top officials of central banks leaders that throw some light as regards the future course of interest rates. While a dovish tone causes a currency sell-off, a hawkish tone makes the currency stronger. #5: Inflation reports. In general, EURUSD currency pair is not impacted by inflation reports.

This is because the inflation in Europe and the US is usually in the range of 2 to 3 percent and the central banks take any action only if inflation goes outside this range. During the last ten years, inflation has gone out of the range only during the time of the global financial crisis. It came back into the range rather quickly as well. Small deviations within the range are often neglected by market participants. In addition, inflation is worked on a monthly basis in the US and Europe. As a result, the impact is very low. However, the release of inflation reports cannot be ignored. This is because inflation is calculated on a quarterly basis in New Zealand and Australia. This causes emergence of nice trends when these economies release their inflation or Consumers Price Index (CPI) reports. Summarizing, it is much safer to trade the abovementioned events than other less significant news. Irrespective of whether a trader follows fundamental or technical analysis, it is a good idea monitor the release of these data to trade accordingly. The events listed above impact or move the markets for a significant amount of time, say up to about 24 hours.

Traders don’t have to take positions and close trades in a hurry and be satisfied with small amount of profits when these important data are released. However, traders need to keep in mind the fact that it is difficult to predict the market reaction at times. As such, even if stop loss gets activated after a news release, traders can reverse their position and take positions in the opposite direction in line with the market trend. Forex News Trading Strategy. High impact Forex news trading strategy (also called news volatility straddle ) was developed specifically to trade important Forex news with as little risk as possible. It can be used only for influential Forex news releases such as US GDP, non-farm payrolls, or interest rate decisions. Although all currency pairs react to such news, the USD-based currency pairs show the best result due to low spread and high liquidity. Circumvents spread widening and slippage problems. Fundamental basis for a trade.

Simple setup. High success rate. Important news events are quite rare. A broker with low spreads and high quality trade execution is required. Choose an important news release that has a high impact on Forex pairs. For EURUSD, I recommend US GDP, US nonfarm payrolls, US interest rate decisions, Eurozone interest rate decisions, and US PCE reports. Open Buy and Sell positions one minute before the scheduled news release. It will help you to protect the trade from slippage and widened spreads. Set stop-loss for both positions to 10-20 standard pips depending on the expected news volatility.

Set take-profit for both positions to 5 ? SL . It will provide the necessary risk-to-reward ratio. The news volatility will most probably trigger one trade's stop-loss and the other's take-profit. Move the surviving position's stop-loss to breakeven once the paper profit reaches original stop-loss distance. Close any positions left one hour after the news. If your broker uses "first in, first out" (FIFO) execution model, it is still possible to trade news with this strategy. Place pending orders with entry points at the levels you would set the stop-loss of the original BuySell positions. When one pending order is triggered, the other one should be canceled. This strategy modification is required to use it in MetaTrader 5. Unfortunately, it suffers from additional exposure to widened spreads and slippage. The example depicts a trade on USDCAD @ M30 chart during a joint announcement of the US and Canadian unemployment figures for October at 13:30 UTC on November 6, 2015: The entries are shown with the blue and red arrows pointing right. The blue one is Buy; the red one is Sell. The original stop-loss levels are the red lines above and below the entries. The pink line is the Buy trade's stop-loss after it was moved to breakeven. The take-profit levels are the green lines above and below the entries. The Sell was closed by stop-loss during the first second after release. The exit is marked with the red arrow pointing left.

The Buy was closed by time-out an hour after the news. It failed to reach the target level but still earned enough profit to cover the loss on Sell and produce a significant reward. The exit is marked with the blue arrow pointing left. Use this strategy at your own risk. EarnForex. com cannot be responsible for any losses associated with using any strategy presented on the site. It is not recommended to use this strategy on the live account without testing it on demo first. Do you have any suggestions or questions regarding this strategy? You can always discuss Forex News Trading Strategy with the fellow Forex traders on the Trading Systems and Strategies forum. Forex important news. Get the best parts of DailyFX.

com in the new DailyFX App. Weekly Fundamental Forecast: Dollar Sheds Gains During Jackson Hole, Political Risks Fight Summer Lull. The Dollar shed gains as the Euro and Pound retook some lost ground amid lackluster Fed minutes, political risk, and the Jackson Hole symposium. Next week, political uncertainties, NAFTA negotiations. Continue Reading. Learn from the DailyFX Experts. Find out where key markets might be headed next. Learn how to get started trading financial markets. Explore strategic concepts to enhance your trading knowledge. EURUSD Weekly Technical Outlook: Euro Bouncing or Reversing?

The recent turnaround in the euro has the downtrend in question, how things play out over the near-term could go a ways towards helping determine whether it’s a bounce or beginning of a rally… Continue Reading. DXY Index Threatens Key Break after Powell’s Jackson Hole Speech. Gold Price Rebound Fueled by Less-Hawkish Chairman Powell. Gold, Crude Oil Prices May Weaken Further on Hawkish Powell Speech. S&P 500 Closes a Record High, Dollar Bull Trend Deflated as Liquidity Tames Headline Tumult. Charts for Next Week: EURUSD, USDJPY, USDCNH, and Gold Price. What if Fear of Trade Wars, Brexit or Rate Hikes Suddenly Vanished? AUDUSD Prices May Consolidate as Downtrend Remains Intact.

AUDUSD prices made cautious gains as anticipated, but the Australian Dollar’s dominant downtrend remains intact. This opens the door to consolidation as stubborn resistance holds. Continue Reading. Foundations of Technical Analysis: Seeing the Forest from the Trees. Nasdaq 100 Chart Winding Up for a Breakout. GBPUSD: Decrease in Net-Longs Triggers Bullish Outlook. Sentiment data provided by IG. Sentiment data provided by IG. Take a free trading course with IG Academy. Our interactive online courses help you develop the skills of trading from the ground up. Live, interactive sessions. Develop your trading knowledge with our expert-led webinars and in-person seminars on a huge range of topics. Free upcoming webinar. S&P 500 Closes a Record High, Dollar Bull Trend Deflated as Liquidity Tames Headline Tumult. Charts for Next Week: EURUSD, USDJPY, USDCNH, and Gold Price.

What if Fear of Trade Wars, Brexit or Rate Hikes Suddenly Vanished? Forex Economic Calendar. About your FOREX. com Demo Account. A demo account is intended to familiarize you with the tools and features of our trading platforms and to facilitate the testing of trading strategies in a risk-free environment. Results achieved on the demo account are hypothetical and no representation is made that any account will or is likely to achieve actual profits or losses similar to those achieved in the demo account. Conditions in the demo account cannot always reasonably reflect all of the market conditions that may affect pricing and execution in a live trading environment. How to trade forex on news releases. One of the great advantages of trading currencies is that the forex market is open 24 hours a day, five days a week (from Sunday, 5 P. M. EST until Friday, 4 P. M. EST). Economic data tends to be one of the most important catalysts for short-term movements in any market, but this is particularly true in the currency market, which responds not only to U. S. economic news, but also to news from around the world.

With at least eight major currencies available for trading at most currency brokers and more than 17 derivatives of them, there is always some piece of economic data slated for release that traders can use to inform the positions they take. Generally, no fewer than seven pieces of data are released daily from the eight major currencies or countries that are most closely followed. So for those who choose to trade news, there are plenty of opportunities. Here, we look at which economic news releases are released when, which are most relevant to forex (FX) traders and how traders can act on this market-moving data. Which Currencies Should Be Your Focus? These are the eight major currencies: 1. U. S. dollar (USD) 2. Euro (EUR) 3. British pound (GBP) 4. Japanese yen (JPY) 5. Swiss franc (CHF) 6. Canadian dollar (CAD) 7. Australian dollar (AUD) 8. New Zealand dollar (NZD) And here is just a sample of some of the more liquid derivatives based on the currencies above: 1. EURUSD 2. USDJPY 3. AUDUSD 4. GBPJPY 5. EURCHF 6. CHFJPY. As you can see from these lists, the currencies that we can easily trade span the globe. This means that you can handpick the currencies and economic releases to which you pay particular attention. But, as a general rule, since the U. S. dollar is on the “other side” of 90% of all currency trades, U. S. economic releases tend to have the most pronounced impact on the market. Trading news is harder than it may sound. Not only is the reported consensus figure important, but so are the whisper numbers (unofficial and unpublished forecasts) and the revisions .

Also, some releases are more important than others; this can be measured in terms of both the significance of the country releasing the data and the importance of the release in relation to the other pieces of data being released at the same time. When Are News Releases Issued? Figure 1 lists the approximate times (EST) at which the most important economic releases for each of the following countries are published. These are also the times at which you should be paying extra attention to the markets if you plan on trading news releases. What Are the Key Releases? When trading news, you first have to know which releases are actually expected that week. Second, it is key for you to know which data is important. Generally speaking, these are the most important economic releases for any country: 1. Interest rate decision 2. Retail sales 3. Inflation (consumer price or producer price) 4. Unemployment 5. Industrial production 6. Business sentiment surveys 7. Consumer confidence surveys 8. Trade balance 9. Manufacturing sector surveys. Depending on the current state of the economy, the relative importance of these releases may change. For example, unemployment may be more important this month than trade or interest rate decisions. Therefore, it is important to keep on top of what the market is focusing on at the moment. How Long Does the Effect Last? According to a study by Martin D. D. Evans and Richard K. Lyons published in the Journal of International Money and Finance (2004), the market could still be absorbing or reacting to news releases hours, if not days, after they are released.

The study found that the effect on returns generally occurs in the first or second day, but the impact does seem to linger until the fourth day. The impact on the flow of orders, on the other hand, is still very pronounced on the third day and is observable on the fourth day. How Do I Actually Trade News? The most common way to trade news is to look for a period of consolidation ahead of a big number and to just trade the breakout on the back of the number. This can be done on both a short-term basis within one day (intraday) and a daily basis. Let’s look at the chart in Figure 2 as an example. After a weak number in September, the market was holding its breath ahead of the October number, which was to be released to the public in November. In the 17 hours before the release, the EURUSD was confined within a tight 30-pip trading range. (A pip is the smallest measure of change in a currency pair in the forex market. Since most major currency pairs are priced to four decimal places, the smallest change is that of the last decimal point.) For news traders, this would have provided a great opportunity to put on a breakout trade, especially since the likelihood of a sharp move at this time was extremely high.

We mentioned earlier that trading news is harder than you might think. Why? The primary reason is volatility. You can be making the right move but end up being stopped out or the market may simply not have the momentum to sustain the move. Let’s look at the chart in Figure 3 as an example. This chart shows activity after the same release as the one shown in Figure 2, but on a different time frame to show how difficult trading news releases can be. On November 4, 2005, the market had expected 120,000 jobs to be added to the U. S. economy, but instead only 56,000 jobs were added. This sharp disappointment led to an approximately 60-pip sell-off in the dollar against the euro in the first 25 minutes after the release. However, the dollar’s upside momentum was so strong that the gains were quickly reversed, and an hour later, the EURUSD had broken its previous low and actually hit a 1.5-year low against the dollar. Opportunities were plentiful for breakout traders but bullish momentum in the dollar was so strong that such a bad payrolls number failed to put a sustainable dent in the currency’s rally. One thing you should keep in mind is that, on the back of a good number, a strong move should also see a strong extension. Can I Avoid Getting Hit by Volatility When Trading News? The answer to capturing a breakout in volatility without having to face the risk of a reversal is to trade FX SPOT options. A number of different FX brokers offer a variety of exotic options.

Exotic options generally have barrier levels and will be profitable or unprofitable based on whether the barrier level is breached. The payout is predetermined and the premium or price of the option is based on the payout. The following are the most popular types of exotic options to use to trade news releases: A double one-touch option has two barrier levels. Either one of the levels must be breached prior to expiration in order for the option to become profitable and for the buyer to receive the payout. If neither barrier level is breached prior to expiration, the option expires worthless. A double one-touch option is the perfect option to trade for news releases because it is a pure non-directional breakout play. As long as the barrier level is breached – even if the price reverses course later – the payout is made. A one-touch option only has one barrier level, which generally makes it slightly less expensive than a double one-touch option. The same criterion holds – the payout is only made if the barrier is breached prior to expiration.

This is a good option to buy if you actually have a view on whether the number will be stronger or weaker than the market's consensus forecast. A double no-touch option is the exact opposite of a double one-touch option. There are two barrier levels, but in this case, neither barrier level can be breached before expiration – otherwise the option payout is not made. This option is great for news traders who think that the economic release will not cause a pronounced breakout in the currency pair and that it will continue to range trade. FX SPOT options are a viable alternative for those who do not care to get whipsawed in the markets by undue volatility before they actually see the spot price move in their desired direction. Top U. S Forex News Sites. No forex trader can afford to ignore the impact of news on foreign exchange markets. Geopolitical developments, peace or conflict situations, financial and economic data releases (like macroeconomic figures), and natural disasters all can have a significant impact on forex markets. The highly dynamic, round-the-clock forex markets require constant tracking of news developments. Here are the top U. S. sites for tracking the latest forex news. Bloomberg Forex News: Bloomberg, a world leader in market data and financial news services, has a dedicated section on its popular web portal for forex news. This section not only covers the forex news items, but also commentary, analysis reports, and short-term future developments for global currencies. The coverage is global and includes impact on currency markets from other markets like commodities, equities, macroeconomic developments, political development, loans, and inflation. Reuters Forex News ( U. S. Edition) : Reuters, another large player in the news and market data segment, offers rich content for forex news with timely coverage.

Multiple local and global editions are available for its websites, and it offer both local and global coverage. The available news items are tagged with important tickers (like Bonds, Airlines, Financials, etc.) that offering easy categorization of news items. Below is an example of how Reuters presents forex news: DailyFx: DailyFx has forex news coverage at global level available under categories like Market News, Daily Briefing, US Dollar Index, and Forecasts. It also has news dedicated to major currency pairs like EURUSD, GBPUSD, and USDJPY, among others. The dedicated section for US dollar news is quite handy. One important and useful feature for forex traders is the news and analysis reports available on the DailyFX homepage. These provide recommendations for taking positions in advance of expected market developments. See below for examples. FxStreet : The FxStreet news section offers timely updates and commentary for global developments.

Its unique and useful features include filters which traders can set to tailor a news stream for particular currency pairs, technical news, certain central banks, commodities, and the like. See how the filter works below: FxStreet also covers important upcoming developments through its “Next Economic Event” section. Recognizing the important of social media in shaping news events, FxStreet offers a forex Tweets section, where important news and recommendations are available for timely updates. FOREXNEWS. com: FOREXNEWS. COM is another site dedicated to forex news. The content and coverage is comprehensive. It offers live forex news, trade ideas, an economic calendar, and live rates. It also covers Bitcoin news. Below, see examples from the FOREXNEWS. COM site. FOREXLive. com: Similar to FOREXNEWS.

com, FOREXLive. com offers similar news coverage with latest commentary on forex market developments. Additionally, it offers technical analysis linked to timely applicable technical trading strategies. See below for examples: XE. com: In addition to the usual forex news, features, tools, charts, and an economic calendar, XE. com offers a powerful search and filter functionality. Traders can search for the desired major currency; choose topics from a drop down menu that includes technical analysis, monetary policy, and central banks; or enter their own keyword-based search. See below: EFxNews : The unique feature of efxnews offers timely coverage of forex news items, categorized under Institutional Strategies, Central Bank Insider, eFx columns, and all general articles. News covered in each section contain useful trading examples as applicable to the news items, with detailed technical analysis and trading opportunities. Other good forex news sites worth mentioning include: Forex News Aggregators : Apart from self-created news content, there are numerous forex news aggregator sites For example, Forexfactory aggregates news from multiple sources and provides it in consolidated format on its Forex News portal. The Bottom Line. Tracking news developments, understanding how the forex markets my respond, and taking timely action on trading is crucial for achieving any success in forex markets. Most of the forex news sites we've mentioned in the article offer a feed service. These allow users to subscribe to their news feed for quick and timely access to market developments. Along with free and paid online sources, traders can also explore dedicated programs and applications offered by vendors (like Bloomberg) for getting access to news and alerts. 5 Forex News Events You Need To Know. In the fast moving world of currency markets where huge moves can seemingly come from nowhere, it is extremely important for new traders to learn about the various economic indicators and forex news events and releases that shape the markets.

Indeed, quickly getting a handle on which data to look out for, what it means, and how to trade it can see new traders quickly become far more profitable and sets up the road to long term success. Trading technical chart patterns can be extremely profitable but one must always be aware of the fundamental story which is ultimately driving the markets. Below we have listed five of the most important News ReleasesEconomic Indicators you need to know right now! Top 5 Market News Events. 1.Central Bank Rate Decision. Each month the various Central Banks of the world’s economies meet to decide over the interest rates they are responsible for. The decision they have to make is whether to leave rates unchanged, raise rates or lower rates and the outcome of this decision is extremely important to the currency of the economy and as such, to traders. An increase in rates is generally seen as bullish for the currency (meaning it will increase in value) and a decrease in rates is generally bearish for the currency (meaning it will decrease in value) whilst an unchanged decision can be either bullish or bearish depending on the perception of the economy at the time. Whilst the actual decision itself is crucial, so too is the accompanying policy statement here the Central Bank gives it’s overview of the economy and how they view the future outlook. This is also where monetary policy is announced, which concerns vital matters such as the implementation of QE, which we explain thoroughly in our Forex Mastercourse. Some of the best trades you can make come from rate decisions, for example, since the ECB cut the EuroZone rate to 0.05% in September 2014, EURUSD has since fallen by over 2000 pips. The Gross Domestic Product is an important indicator of economic health in a country. A country’s central bank has expected growth outlooks each year that determine how fast a country should grow, as measured by GDP . When GDP falls below market expectations, currency values tend to fall and when GDP outdoes expectations, currency values tend to rise. As such this figure’s release is keenly observed by currency traders and can be used to cautiously anticipate Central Bank movements . When Japan’s GDP shockingly shrunk 1.6% in November 2014, the JPY fell sharply against the Dollar as traders anticipated further Central Bank intervention. 3.CPI (Inflation Data) Consumer Price Index is the most widely used inflation measure out of the various economic indicators.

The index gives information about the historical average prices paid by consumers for a basket of market goods and highlights whether the same goods are costing more or less for consumers. Central Banks monitor this release to help guide them in their rate and policy setting. If inflation is seen to be evident, and moving beyond a certain target then interest rate rises are used to counter this. In November 2014, Canadian CPI beat market expectations of 2.2% and came in at 2.3% with Canadian Dollar subsequently traded up to a six year high against the Japanese Yen. The unemployment rate of a country is crucial to markets given its importance to Central Banks as an indicator of the health of an economy. Higher employment leads to interest rate rises as Central Banks aim to balance inflation with growth and as such this figure draws huge market attention from traders. Alongside the Unemployment rate the two most important labour statistics are the US ADP and NFP figures released each month with the NFP taking prime position. This figure is so important we do an NFP preview each month giving you our analysis on the release and how to trade it. Given the market’s current attention to the likely date of a Fed rate hike, this figure is growing in importance each month. The ADP data is considered an important predictive tool for the NFP as it is released beforehand. Although the Central Bank meetings of all economies are extremely important, America’s Federal Open Market Committee meeting takes canter stage as the US Dollar is currently the world’s reserve currency . Each month the committee meets to set rates and to give it’s pronouncement on current economic conditions and the effectiveness of current monetary policy, casting an eye forward to expectations of future economic conditions and adjoining monetary policy. The committee is made up of members which vote at each meeting with “Hawkish” members those in favour of a rate rise and “Dovish” members those favouring a lowering of rates. The statement released by the Committee is keenly scrutinized by traders looking for clues as to how the Central Bank will behave in future and even the most seemingly inconsequential of terminology can cause large market moves, as seen recently concerning the Fed’s usage and then removal of the term “patient”, regarding rate hikes. FOMC meetings can cause huge market volatility as seen on March 18th 2015 when EURUSD spiked up 400 pips in a matter of minutes as markets perceived the meeting to be USD negative. These Central Bank meetings are where we also learn about any changes in monetary policy, such as the announcement of quantitative easing.

This is extremely important to currency traders and we explain this topic fully within our course. Since the ECB announced their latest QE program on Jan 22nd of this year, EURUSD has fallen by over 600 pips. The key thing with all economic indicators and news releases is not just what the actual release means but how the market anticipates the release and subsequently reacts to it, this is where the trading opportunities are created. It can be extremely difficult for new traders seeking to trade news events as the volatility and uncertainty can be overwhelming, fortunately we have a fantastic suite of indicators which are perfect for trading news events. Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

News Makes the Forex Market Move. It’s not enough to only know technical analysis when you trade. It’s just as important to know what makes the forex market move. Just like in the great Star Wars world, behind the trend lines, double tops, and head and shoulder patterns, there is a fundamental force behind these movements. This force is called the news ! To understand the importance of the news, imagine this scenario (purely fictional of course!) Let’s say, on your nightly news, there is a report that the biggest software company just filed bankruptcy. You own shares of this company. What’s the first thing you would do? How would your perception of this company change? How do you think other people’s perceptions of this company would change? In fact, this is probably what just about everyone else who had any stake in that company would do. The fact is that news affects the way we perceive and act on our trading decisions. It’s no different when it comes to trading currencies.

There is, however, a distinct difference with how news is handled in the stock market and the forex market. Naturally you would sell off all your shares, and as a result of you hearing the news a day earlier, you would make (save) more money than everyone else who heard it on their nightly news. Sounds good for you right? Unfortunately this little trick is called INSIDER TRADING , and it would have you thrown in jail. Martha Stewart did it and now she has a nice mug-shot to go along with her magazine covers. In the stock market, when you hear news before everyone else it is illegal. In the forex market, it’s called FAIR GAME ! The earlier you hear or see the news, the better it is for your trading, and there is absolutely no penalty for it! Add on some technology and the power of instant communication, and what you have is the latest and greatest (or not so greatest) news at the tip of your fingers. Big traders, small traders, husky traders, or skinny traders all have to depend on the same news to make the market move because if there wasn’t any news, the market would hardly move at all! The news is important to the forex market because it’s the news that makes it move. Regardless of the technicals, news is the fuel that keeps the forex market going! The investor and trader communities watch the economic indicators very closely as the release of these data have an immediate as well as volatile effect on the currency market. The three main types of indicators are the leading, coincident, and lagging indicators. The leading indicators change ahead of the changes in the economy and provide you with some idea as to what might happen prior to the actual occurrence.

On the other hand, coincident indicators give an idea of the changes at around the same time as they actually occur. The lagging indicators provide an idea of the changes after the events actually occur and, therefore, are of little or no use when it comes to prediction. There is no doubt about the fact that interest rate decision is one of the major driver of the forex market, but the Fed watches closely several other economic indicators prior to deciding on the monetary policy during their meetings. As a result, the list of high impact news releases given below is also of great importance when it comes to forex trading or investing in currencies. #1: Interest Rate Decision. Interest rate decision drives the forex markets around the world. However, the Federal Open Market Committee or FOMC takes into account a host of economic data in order to judge the overall health of the U. S. economy. Based on an analysis, the Fed employs the tools at its disposal to raise, lower, or leave interest rates unchanged. Among all economic indicators, the GDP is by far the most important one. It provides an idea of the state of the U. S. economy. The GDP data is generally released on the last day of every quarter. It reflects the economic activity of the previous quarter. The GDP represents the aggregate or total monetary value of all the goods and services produced by the U. S. economy during the quarter. However, it excludes international activity. The most important aspect to look for when the GDP data is released is the growth rate. #3: Consumer Price Index (CPI) This report is widely used for measuring the rate of inflation.

The data for the previous month is released around the 15th of each month. The CPI provides a measure of the change in costs of a host of consumer goods as well as services from one month to another. The retail sales data provides a measure of goods sold by the retail industry and includes sales in large chain stores to smaller local stores. Data is collected from a sampling of a set of retail stores across the country. The retail sales data for the previous month is released around the 12th of every month. The retail sales report is frequently revised significantly once the final numbers come out. #5: Employment and Unemployment Rate. On the first Friday of every month the employment data announcement is made. It includes the rate of unemployment (the percentage of the total work force that is not employed), the number of new jobs that are created, and the average hourly earnings. Markets experience significant price movements at the time of the release of this report. #6: Nonfarm Payrolls Data. Nonfarm payrolls data gives a measure of the change in the number of people, excluding those in the farming industry, that were employed during the previous month. As full employment is one of the mandates of the Federal Reserve, it is very closely watched by the investor community.

If the reading is stronger than analysts’ forecast, the USD often becomes stronger. On the other hand, if the reading is weaker than the forecast, the USD becomes weaker. #7: Industrial Production. Industrial production data for the prior month is released around the 16th of every month simultaneously with capacity utilization report. The figures are worked out on the basis of the raw volume of goods produced on a monthly basis by mines, factories and electric utilities. It also includes production from newspaper, periodical and book publishing businesses, which are traditionally considered as manufacturing. The industrial output data, used in conjunction with many industry capacity estimates, calculates capacity utilization ratios for various businesses. The industrial production data is considered as a coincident indicator. #8: Trade Balance. Balance of trade data is released around 19th of every month for the month that is two months prior to it. Investors and policymakers make use of the trade balance data to gauge the health of the U. S. economy. It also provides information on the country’s relationship with other countries around the world. The balance of trade report often moves the markets when released if there is a marked change from the previous period. Investors will be very happy if the trade balance remains at the current levels or falls. This is because it shows that exports are on the rise. This means that the companies that are exporting are selling more of their products and realizing increased revenues.

#9: Producer Price Index. Producer price index, read along with the CPI, provides important information about inflation. This report, released during the second week of each month, provides data for the previous month. The producer price index is a measure of the wholesale price of goods. The PPI measures as to how much producers are being paid for their goods, while the CPI measures as to how much consumers are paying for goods. #10: Durable Goods Orders. The report on durable goods orders provides a measurement as to how much individuals are spending on the purchase of long-lasting goods. Durable goods are products that last for more than three years. This report is released around the 26th of every month and provides some insight into the future performance of the manufacturing industry. 170 . wrayjustin Trading Pennies for Dollars FXMarketMaker Professional Trader Hot_Biscuits_ Models and Bottles spicy_pasta RichJG Financial Astrologer El_Huachinango MOD finance_student Prop Trader AutoModerator » the front page of the internet. and subscribe to one of thousands of communities.

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