There are only two ways of trading in the Forex market, technical and fundamental trading. The technical trading approach is characterized by watching and monitoring of Forex charts. Tools such as moving average and indicators such as fibonacci studies and trendline analysis are used to do this. On the other hand, the fundamental trading approach involves basing your odds on the market news. This is the overall principle of Forex news and event trading. By far, trading the Forex news and events is one of the most profitable strategies that would enable a trader to make large sums of money within a short time. As compared to technical trading, this approach is considered less risky. There are various news and events that a news trader should watch to remain profitable. Here are some of them.
1. News about US dollar
To be profitable with news and events trading, you must keenly follow every news and events that involves US dollars. The US dollar have greatest impact on the Forex trading and the market as a whole. This fact is well known by most traders including the technical traders. News about US dollar is keenly followed and watched by many participants in the Forex market so as to take any slight advantage to make profits and also avoid downfalls. There are hot announcements involving US dollar which are released every month.
2. Employment reports
Every month on a Friday, there is an announcement about employment report. This is a hot announcement to watch if you want to be successful with news and events trading. It is important for news trading because the employment has a direct impact on the US dollar currency. As already been illustrated the US dollar greatly impact the Forex market. Any other item that affects the US dollar also affects the market in general. When large numbers miss employment, massive moves are expected in the currency prices. However, you need to be careful because the effect happens for a short duration.
3. International trade
International trade is another very important announcement that you should be keenly following. There are two major reasons why the news about internal trade is very important. First, it influences both the economic strength and growth of US dollar. This allows it to also to dictate the movement of other currency prices because of the US dollar influence. Secondly, international trade news is a strong measure of trade-centric economies e.g. for the Japan.
4. Trade balance
In the Forex market, there are significant effects and impacts that news about trade balance causes to currency prices. This is because a country’s trade balance also influences the strength of its currency and the economy in general. For example, an economy that is importing in excess of the amount of goods that they export to their trade partner would be forced to pay for the goods using their local currency making it weaker against the other currency. This leads to a weak currency pair position in the Forex market.
Conclusion
Trading Forex news, or the fundamental trading is very profitable but only if you understand how to use the global news and events that affects the Forex market. There are many other news and events to watch apart from what has been discussed above. For a news trader to be successful, he must keenly watch two kinds of news; news which are moving the market and those that are causing predictable reactions.
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