Forex News Trading: Why It Matters

Forex news, or Fundamental news, is the engine that drives the Forex markets

. Basically, when high impact news comes out concerning a currency, traders react causing big moves and shifts in the market. Therefore, by understanding how to benefit from these news events, you can both increase your profits and avoid costly trading mistakes. Forex News Trading can be a big benefit to your trading performance and profits.

A lot of traders don't take into consideration how news effects the currency markets, or think it is too hard to figure out. New traders also see winning trades turn into big losers because of news announcements they were unaware of. Others simply try to avoid trading during news announcements all together. But the best thing to do is learn how to trade the news in a consistent manner that adds pips to your account like clockwork.

Just think about it. The Forex market is not made up of machines, but traders which are people just like you and me. And as much as you hear you should not let your emotions influence your trading decisions, they do. After all, we are only human. Therefore, hearing bad news makes us want to avoid a currency. And in the same way, good news makes us feel confident in a currency.

Unfortunately, many of the "Forex News Trading Strategies" simply don't work. Or more to the point, are not consistent and too difficult under live market conditions. If you try to trade right at the time of a big new announcement, like Non-Farm Payroll, you are faced with the problems of brokers increasing their spreads, trouble getting filled, slippage and platforms freezing. And while big profits CAN be made in a very short time, you can also suffer big losses.

For these reasons, a lot of traders gravitate to Technical trading. The only problem is focusing on only technical analysis without taking into account market sentiment, risk appetite and risk aversion can lead to misreading the market and costly mistakes. If just makes sense that a combination of news trading and technical trading is necessary for safe and consistent results.

Understanding how news effects the markets can tell you which currencies to trade, when and in which direction. The technical trading techniques can be used to find the best entries, protect profits and manage the trade for maximum profits. Basically, you can get the best of both worlds.

by: Edward Lomax.

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