Trade Forex News - Learn To Trade The Forex News For Big Pips
Knowing the answer to questions like "where will the GBP/JPY move to at day's end" could be worth a few pips in anyone's book
. More than likely a whole lot more than a few. Someone with the capacity to tell the future would make a pretty fine forex trader!Thing is, the capability to read the future isn't in my super-hero powers, so I have to rely on more conventional methods to spot budding trends. One of the principal weapons I have in my forex trading arsenal is a firm understanding of the value of trading the news.
There is an on-going quarrel as to which trading system makes for the most consistent results. Technical analysis or news trading. Some even vote for chucking darts at a board. I'm open to most ideas but I kind of like having money in my trading accounts so I don't think I'll be using the dart routine anytime soon.
For me, trading the news is what produces the most steady trades. Latching on to a breaking news item early on, has opened some of the most profitable waves in my forex trading career. Yes, there have been some that didn't work out exactly as planned, but on the whole, trading the news has been profitable for me.
Proponents of technical analysis would insist that breaking news isn't first hand information and not accurate enough to be profitable. I say bull-dust. Breaking forex news creates mass currency movements in both directions and being in at the start of a mass move is as good a way to almost guarantee gains as anything I know of.
Quick example just to illustrate this. The Somewhere Land National Bank decides their national currency is over valued. An overpriced currency makes exports expensive, reducing demand for goods , eventually leading to a drop in manufacturing output. No point manufacturing goods nobody wants to buy is there? Falling production means less jobs, rising social welfare bills and less consumer spending. Not really what the Central Bank gurus had in mind for Somewhere Land.
So the National Bank steps in and sells the national currency. A lot of currency. Billions. Result? Your dollar (or Euro or Pound) is suddenly worth a lot more of Somewhere Land's currency.
Had you caught the trend, then your trades would be at the peak of the move. You probably won't have advance knowledge of the move (unless you know someone within the Central Bank of Somewhere Land) so the next best option is to jump on the trend with the breaking news. The news breaks, you start trading.
As your trades are hard at it accumulating pips (profit for your account), the technical guys are waiting for their indicators to spot the move. By the their charts recognize the development, our positions as forex news traders are well into profit.
One of the sticky points for choosing a currency exchange broker has to do with their level of news services. Your broker might well have the best applications, lowest spreads, best leverage, but if their news reporting is poor - you'll miss out on the big movers.
The big trading houses worldwide employ dedicated forex news trading teams. The realize that catching trends early leads to the maximum profits, so trading the forex news plays a big part in their overall strategy.
Quick question for you. Are you that good you can avoid to ignore the tools the big-boys use? Take the next step in your career and learn to trade forex news. Your forex trading account will thank you for it.
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