While the markets react mostly to economic news from different countries, some of the largest moves and most influential news in the forex market often comes from the U. The reason behind this is that the U. economy is the largest in the world and the U. The implication of this is that the U. Dollar is a participant in roughly 90 percent of entire forex transactions, which makes the U.

news and data a significant instrument to watch out for particularly when you are doing forex news trading. The list of currencies that you can trade on news releases are really versatile. This makes it easy for you to handpick the currencies and economic releases that you want to trade.

However, because the U. dollar is on the opposite side of the majorities and roughly 90 percent of all currency trades, U. economic releases commonly make the most impact in the forex market. When doing forex news trading, the consensus figure report is essential together with unofficial and unpublished forecasts and the revisions of consensus report. The table below illustrates a rough estimate of times in EST when the following countries releases their most significant economic data.

You should pay attention to those times if you want to do forex news trading or just to be aware of fundementals that can impact all trading strategies. Some traders will even avoid trading around major news releases due to the volatility that can occur.

The effects of the news release of economic data of these key currencies commonly last from between a few hours to one or two days. However, sometimes impact can last longer. There are also unexpected news events such as the CHF peg and Covid which can cause longer lasting effects. One of the most significant ways to trade news can be to search for a period of consolidation before a big number and to merely trade the breakout behind the number. Trading with directional bias implies that you anticipate that the market will move in a specific direction as soon as the news report is released.

When you want to trade the news in a specific direction, it is essential to be aware of what specifically about the news report that is likely to trigger the move in the market. With these you can make a better estimate on which news reports will, in reality, trigger the market and the potential direction it could move. A more widespread news trading strategy is the non-directional bias approach. The non-directional bias trading approach does not take into consideration any specific direction and merely trades the market based on the fact that a large news report will generate a huge move.

Your concern is to be there as soon as they are released and the market makes a move. The first thing you ought to do before the news release is to watch the trend of the unemployment rate to observe whether it is increasing or decreasing.

By looking at what has been occurring in the past, you can prepare yourself for what may occur in the future. Assuming that the unemployment rate has been rising continuously. You could at this point confidently say that jobs opportunities are declining and that there is a good chance that the unemployment rate will keep moving higher and higher.

Because your anticipation is that the rate of unemployment will rise, you can begin to make preparations on how you can go short on the dollar.

This is your directional bias. Observe the high and low that has occurred. As central banks such as the Fed use the CPI number to track inflation, there is a direct relationship between CPI and interest rate policy. Most important release: US Gross Domestic Product How often: Quarterly.

The US gross domestic product number is released by the Bureau of Economic Analysis, on a quarterly basis. As GDP is released at wide intervals, the bureau also releases preliminary figures at the end of each month.

While a central bank such as the Federal Reserve would never make a final interest rate decision on GDP alone, it does still serve as evidence used to base decisions around. The same can be said for a GDP number in decline, signaling an economic slow-down that could require rates to be cut.

Sometimes the unpredictable nature of the society we live in means things happen, things that move markets. This section encompasses all other high impact Forex news releases that you may or may not find on your economic calendar. Important Examples: Political speeches, central banker speeches, terrorist attacks How often: Sporadic.

An example may be the US president stepping up to the microphone at a campaign rally for an off-the-cuff announcement of an economic stimulus package. This has the potential to send the US Dollar soaring as fiscal policy affects demand. Another more sober example, is a terrorist attack. If a bomb goes off in a busy underground station, panic soon spreads to markets as traders price in the probability of economic slowdowns and the uncertainty of war.

Did you notice that the most important Forex news releases throughout our list, are all from the US? Maybe a brief spike in volatility would be recorded across USD currency pairs. But the large difference meant things were worse than expected, so traders sold the USD. The effect is evident on the EURUSD chart above. This might be the strategy for you if you know nothing about interpreting the news but hope to profit from trading it. The breakout forex news trading strategy allows you to prepare for a breakout in either direction without worrying about what the news says.

Here is how you do it. A possible outcome is that the price goes in one direction, triggers one of your orders, and reverses to trigger your second order. That is why you need to set stop losses to protect your account. This scenario is what we have up there on the chart where price made a false breakout to the downside before reversing direction.

This strategy is like the straddle news trading strategy. Both have no care for what direction the news would drive the market. You only look to profit from the pair, irrespective of what the news says.

Many short-term traders base their decisions solely on technical analysis and price charts, regardless of which markets they are trading. It's common for traders to completely ignore fundamental factors and instead follow price trends, analyse support and resistance levels and weigh up various signals from technical indicators. News releases such as earnings reports and changes to interest rates and inflation can significantly impact the markets.

Trading on news releases can, therefore, prove vastly beneficial to traders and can significantly strengthen their trading strategy by adding economic announcements to their purely technical and charting approach. Learn how to trade the news and spot potential trading opportunities within the financial markets. These can include changes to interest rates, inflation, unemployment levels or retail income for a specific country and these all have a significant effect on the financial markets and overall state of the economy.

Economic announcements often involve these particular factors when advising traders of recent changes within the markets. A news trading strategy involves trading based on market expectations, both before and after a news release.

Trading on news announcements can require you to make quick decisions, as the financial markets may be impacted almost immediately. Therefore, you will need to make quick judgements on how to trade the announcement. When trading on news releases, it is important that you are aware of how financial markets work. Sometimes news is already factored into the assets price.

This happens because traders attempt to predict the results of future news announcements and so, in turn, the market responds by changing the price of an asset. News-based trading is especially useful for volatile markets, for example oil trading. Read more about using fundamental analysis in the consideration of external factors as part of your news trading strategy. As with other asset classes, forex trading news can become particularly active before and following major economic events.

However, there are significant differences between the type of news that sets apart currencies from other financial markets. Forex markets tend to respond the most to macroeconomic news — the kind of developments that reflect or impact broad economies.

News that suggests a more hawkish aggressive central bank tends to push forex pairs up in value relative to other currencies, while dovish peaceful news can cause a currency to depreciate. Currencies of countries that are major exporters of raw materials or commodities can be impacted by news forex trading news, as this affects the prices of the main commodities that they produce. These currencies are often referred to as resource currencies.

Prices of commodities that affect these currencies can be influenced by issues affecting supply and demand. On the supply side, news that suggests a lower supply can push up prices, while news that suggests higher supply can depress prices, which can then impact related currencies.

News that could reflect changes in supply may cover political tensions, wars, terrorism, weather, economic sanctions, labour relations strikes and more. Speculation and pricing related to demand is mainly influenced by many of the same major news releases noted above, plus commodity inventory reports and outlooks. In order to come up with a comprehensive forex trading strategy using news releases, forex traders tend to look out for certain key forex indicators that can have an impact on interest-rate speculation, including:.

News related to market sentiment can also influence currency trading, particularly those considered to be safe havens, including the commodity gold, as well as major currencies USD, JPY and CHF.

These currencies tend to attract capital during times of turmoil and see outflows when the financial markets settle down. News that can impact risk-on, risk-off trading includes stock market returns and volatility, financial stresses at the national or continental level, political turmoil, elections, treaty negotiations and other broad news beyond economic data and central banks. Recent examples include the Greek debt crisis and China market turmoil.

Traders should be aware that demand for many commodities — and therefore the commodity's price — rises and falls with the seasons. Seasonal forex trading news and impacts tend to be seen in energy and agricultural commodities, but less so for precious metals. The table below shows some of the main resource currencies and the commodities that affect them. These can be used by traders as a sort of forex news trading signal, as it can help to predict where the price of the currency is headed.

Stock trading based on news releases is a strategy used by many long-term investors, as well as short-term traders. If a company has strong balance sheets, cash flows and earnings reports consistently, then a trader may decide to buy and hold the share for a longer period of time.

However, if a company releases a report with considerably lower financials than expected, this can cause a rally for traders to short the stock as its value is decreasing. Traders can perform company analysis before deciding whether to invest in a stock. This includes analysing its growth rate potential, as well as any potential legal, political or insolvency risks. Our Morningstar equity research reports are updated regularly with new information about company fundamentals.

These are available for a wide range of shares on our platform and can also indicate whether they are considered to be overvalued, fairly valued or undervalued within the stock market. This information may help traders to make a decision on whether to enter a position or not. Register for a live account now to access our Morningstar reports. In general, news that has a significant impact on individual company shares may not have a major impact on currencies. Stock market news that has little or no impact on currencies includes earnings reports, management changes, mergers and acquisitions and partnerships.

Therefore, it may be easier for some to make more reliable forex news trading predictions on how the market will perform. Some brokers offer automated news trading signals that can help a trader to make decisions on whether to enter, exit or avoid a trade.

These hints are based on price fluctuations after a certain type of news release and can prompt traders to either buy or sell an asset. A manual alternative is to monitor upcoming tradeable events using our economic calendar. This feature can be found on our Next Generation platform and highlights events such as unemployment reports, GDP, CPI and PPI figures, as well as trade reports and sentiment surveys. These events can all have an effect on market sentiment and cause major price swings within the financial markets.

Our market calendar can be customised by date, market impact low to high and country, so you can filter these to be more relevant for the asset or market that you are interested in trading. You can also set alerts for individual events that you wish to monitor. Certain major economic announcements can bring additional volatility in the markets, even if it is for just a short period of time.

Even the neatest forex or stock chart patterns can temporarily be thrown out of sync by a significant trading announcement, such as the latest unemployment news or changes to interest rates or inflation from a nationwide bank.

Paying attention to when trading announcements are due can mean that you end up placing a carefully planned trade just before a major event happens, which instantly triggers your stop-loss. It may be more opportune to wait to open new positions after news events have taken place, and then see if the reason for the trade is still valid. There is normally a consensus amongst leading economists about what level an economic announcement is likely to come in at.

For example, low unemployment suggests a strong economy, so many would expect the stock market to rise. From time to time, however, economic announcements are very different from what the broader market was expecting, and this can cause an opposite market reaction. For example, if a central bank hints that rate cuts may be coming, but the currency still rises, there could be other factors in addition to the prospect of interest rate changes. This could, in turn, prove to be a strong 'buy' signal.

Many traders try to identify trends in the hope of profit. Such trends could range across minutes, days or even months. But most trends reverse at some point, and a change in the underlying economics could be the first sign of this. Every journey starts with a single step and this is true of trend reversals as well. An economic announcement is rarely enough to quickly change a medium-term trend, but how the market reacts to surprises can give the first clue that sentiment is starting to shift.

This offers traders an opportunity to open positions at the very start of a new trend. Seamlessly open and close trades, track your progress and set up alerts.

Of course, there are drawbacks of news-based trading as well. In particular, news trading requires expert fundamental analysis skills, as you will need to understand how certain economic announcements can affect your positions and the wider financial market. There is also the risk of carrying positions for a longer period of time. If the news release requires a few days or weeks to materialise, your trading positions may be open over several days. This brings overnight risk and may require you to pay additional holding costs.

Therefore, traders should ensure that they have sufficient funds in their account to cover these costs. Open an account with CMC Markets to access our multitude of news and analysis tools. It is wise to keep up to date with the ever-changing financial markets.

As discussed, our online trading platform , Next Generation, releases regular news and analysis articles for all financial markets. We also provide fundamental analysis reports from Morningstar, as well as market commentaries and updates from Reuters news on our news and insights section of the platform. By following our news, this ensures that you are always up-to-date with the latest trends and changes within the financial markets, as well as general economic announcements.

Complete with all the regular charting features, these mobile applications make it easy to trade and monitor news announcements on-the-go. You can also set up trading alerts for both desktop and mobile and choose to receive push notifications via the app, email or SMS.

Reading more about our trading alerts. See why serious traders choose CMC. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money. Personal Institutional Group Pro. Australia English 简体中文. Canada English 简体中文. New Zealand English 简体中文.

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December 28, Top 3 News Trading Strategies Trading Tips 2. News trading software As discussed, our online trading platform , Next Generation, releases regular news and analysis articles for all financial markets. Many traders try to identify trends in the hope of profit. France EUR to 4 a. Table of Contents. It can indicate that trends are changing Many traders try to identify trends in the hope of profit.

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