There is a steady supply of financial and economic news every single day of the Forex trading week (Monday to Friday). Many news outlets, such as Reuters or Bloomberg, offer breaking news up-to-the-minute, which leaves many traders and investors for hours on end glued to their computer screens. The sheer volume of news articles can be dizzying in a single day! Fortunately, it is, To effectively trade Forex news, you don’t need to watch every news item or bulletin. In addition, the capital markets that produce a large portion of the financial news do not impact the Forex markets. Forex trade on reports, however, ensures that any move on the global stock markets does not need to be closely watched.

There is a broad variety of economic releases (also known as incidents or indicators) which can be exchanged in order to exchange the news for forex. We want to exchange certain releases that are most likely to trigger uncertainty, preferably. Interest rate decisions by central banks and GDP (Gross Domestic Product) are two of the most important activities of this kind. If interest rates are elevated by the Bank of England (BOE), For eg, since investors are now obtaining more interest in their pound stocks, that may well drive the British pound higher. Today, if a sudden rate hike is made by the BoE, it’s a virtual guarantee that the pound will improve. And if the market expects interest rates to rise and this is what eventually exists, the pound will still gain ground since the BoE’s rate increase is positive news for the pound. The best forex news events to trade are the following:

. Data on jobs (unemployment, salary growth)
. Development in economic terms (GDP)
. (CPI) Inflation

Sales at store

How to read economic calendar

The markets prefer to price for future amounts of time in the economic forecasts. Economic development, as a rule of thumb, implies potential stability, which is then analogous to improving the currency of the region. Traders are waiting for certain economic growth upswings (positive economic releases) because they typically provide chances to hop on an upward trajectory. By reference, Economic forecasts suggesting a decline in economic development also contributed to a weakening of the currency of the region. So, depending on whether the real data meets, fails or reaches the forecast amount, the potential value of a currency is established.

A main instrument that allows traders not to skip crucial activities is an economic calendar. Its architecture is clear. For a selected period of time, economic measures are listed in the table. You see three data columns next to a single indicator: past reading, prediction, and current reading. The calendar only includes the previous reading and the prediction prior to the publication.The actual reading appears at the time of the release.

The forecast is a so-called “consensus” forecast or, in other words, a median of estimates made by a number of experts and market analysts who were interviewed prior to the publication of a specific release. The currency appreciates if the actual data is better than the forecast. The currency tends to depreciate if the actual figures are worse than expected. In most situations, “Better” means higher than forecast and lower than forecast means “worse.” There are, however, a number of exceptions to this rule, such as unemployment claims and unemployment rates: the lower the indicators, the better for the currency concerned. We should also note that there is usually a negligible impact on a number that is close to the forecast level. The bigger the divergence between the actual and the forecast number, the bigger is the impact on the market.

Previous readings are not as critical as predicted ones. Yet, previous readings sometimes get revised. Such revisions tend to occur at the moment when the actual reading is released. If the revision is significant, it will contribute to the market impact of the news.

Important tips

Concentrate on the most significant news that could have the greatest impact on the market.
Wait for the release of the chosen release to be published, and then dive according to the plan into trade.
Remember that the reaction of the market to a news release generally lasts from 30 minutes to 2 hours.

If your basic reasoning and technical analysis fail and the reaction of the market to the news does not match your Do not go against the market in terms of expectations.

Follow the trend of the market (you probably missed some important details in your analysis or misunderstood the effect of a particular release on its publication).

Don’t get into a trade rush. Wait for really strong signals and confirmation from them.

Why trade the news?

“To make more money!” is the simple answer to that question. But, as we learned in the previous lesson, in all seriousness, the news is a very important part of the forex market because news has the potential to move the market!
You can almost expect to see some major movement when news, especially important news that everyone is watching, comes out.

The fact that you know the market is most likely going to move somewhere makes it definitely worth looking at an opportunity.
As a news trader, your goal then is to get on the correct side of the move.

How to Trade Forex on News Releases

We have to look at which news events are even worth trading before developing a ‘Trade the News’ strategy.
Which news releases should I trade? You want to be able to reply. Forex traders should become familiar with the key risks of events that have a major impact on major currencies.
Remember that, because of its ability to increase volatility in the short term, we trade the news,

So, of course, we just want to trade news with the best market-moving potential for the currency market.
Typically, the news that tends to drive price action and produce volatility includes:

Changes in the policy of central banks (“monetary policy”)
Government policy shifts (‘fiscal policy’)
Unexpected results in releases of economic data
A certain world leader who likes to put his name on tall buildings has random tweets

It can help avoid being on the wrong side of the market to be aware of upcoming key event risks.

2 Ways to Trade the News

There is no another strategy for trading the news.

When the news is released, the price usually spikes in one direction or has a muted reaction as traders digest the outcome in relation to market expectations.

With this knowledge, there are two main approaches to trading the news:

• 1) Having a directional bias
• 2) Having a non-directional bias

Directional Bias

A directional bias suggests that you expect the market will move in a specific direction once the news report is released.

When looking for a trade opportunity in a specific direction, it is useful to understand what news reports will cause the market to move.

Consensus vs. Actual Number

Analysts will make predictions on what numbers will be released several days, if not weeks, before a news report is released.

As we discussed in a previous lesson, this number will vary depending on the analyst, but there will be a common number that the majority of them agree on.
This is referred to as a consensus number.

The number given in a news report is referred to as the actual number.

Buy the rumor, sell on the news.

This is a common phrase in the forex market because it appears that when a news report is released, the movement does not correspond to what the report would lead you to believe.

Assume that the unemployment rate in the United States is expected to rise. Assume that the unemployment rate was 8.8 percent last month and that the consensus for the upcoming report is 9.0 percent.

With a consensus of 9.0 percent, it means that all of the major market participants are expecting a weaker US economy and, as a result, a weaker dollar.

With this level of anticipation, major market participants are unlikely to wait until the report is released before taking a position.

They will begin selling their dollars for other currencies before the actual figure is released.

Assume that the actual unemployment rate is released and it is 9.0 percent, as expected.

As a retail trader, you might think, “OK, this is bad news for the US.” “Now is the time to short the dollar!”

However, when you go to your trading platform to begin selling the dollar, you notice that the markets aren’t moving in the direction you expected.

It’s actually rising! What the hell happened? Whyyyyy?

This is due to the fact that the major players may have already adjusted their positions prior to the release of the news report and may now be profiting from the run-up to the news event.

Let’s go back to our previous example, but this time imagine that the actual report revealed an unemployment rate of 8.0 percent.

This would also happen if the actual report confirmed an unemployment rate of 10%.
The only difference is that instead of the dollar rallying, it would decrease!

Because the market consensus was 9.0 percent but the actual report showed a higher 10.0 percent unemployment rate, the big players would sell more of their dollars because the US now appears to be much weaker than when the forecasts were first released.

It’s critical to keep track of market consensus and actual numbers so you can better predict which news reports will cause the market to move and in which direction.

Non-Directional Bias

This would also happen if the actual report confirmed an unemployment rate of 10%.
The only difference is that instead of the dollar rallying, it would decrease!

Because the market consensus was 9.0 percent but the actual report showed a higher 10.0 percent unemployment rate, the big players would sell more of their dollars because the US now appears to be much weaker than when the forecasts were first released.

It’s critical to keep track of market consensus and actual numbers so you can better predict which news reports will cause the market to move and in which direction.