Every trader should consult a forex news calender every day. A trader should never initiate a trade when a bid news story is coming out. In particular the announcement of the NFP on the first Friday of every month can have dramatic price implications. Prices can violently swing in one direction and then reverse course in seconds.
Listed below are some of the news items that can move the market
Consumer Price Index - Rising inflation rates mean increased interest rates
General Elections - Elections can determine future economic policy
Balance Of Trade - A large trade deficit is bad for a currency
Federal Reserve Meetings - Is there any announcement on exchange rates
NFP - Non Farm Payrolls - What is the current employment picture like
Listed below are some strategies for trading fast forex news
Predict The News Item
Take a position before the news item comes out. You need to take into account the current estimates with regard to the news item. It is only the difference between the actual news item and the estimate that counts. An actual figure better than the market will move the market upwards. You can either send a market order or a limit order to initiate the trade. You should be careful to set both the stop price for any loss and a limit order for taking any potential profit. Prices can swing violently around when the news item comes out. It is important that you both take a profit and also limit any loss at a particular time.
Consolidation Points
As prices are heading up or down they tend to form consolidation levels like triangles. Prices typically tend to follow in the direction of the original price move. You should place an order below or above the consolidation level (whichever way you think the market will move). Once the order is triggered you should set the stop / loss level as the height of the original consolidation pattern.
It is important to try and demo trade any of the above strategies before going live. Trading in a fast forex news environment can be quite intimidating. You can make a lot of money very quickly but you can also lose a lot.