News moves markets. It’s a fact as old as time, and one that remains true no matter what surprises life throws our way. Sometimes, breaking news reports have an almost immediate impact on global markets, while other scheduled news releases might have a lesser impact if traders are well-prepared for the outcome.
However, global markets are closely interlinked and a crash in one market may trigger a domino-effect on other assets. Whether you trade Forex, Crypto, Stocks, Indices or Commodities, there’s no way of evading the importance of news trading.
How to trade the news
Trading the news attracts traders from different backgrounds, ranging from beginners to advanced. As opposed to technical analysis which requires a certain level of skill and practice to become profitable, trading the news is a strategy that allows traders to form an in-depth understanding of how markets work and what drives them. With time, traders will begin to notice patterns, anticipate movements, and feel more prepared when the markets take an unexpected turn.
Furthermore, with a good economic calendar, traders can know when to expect market movements and plan their positions in advance. Among these pre-scheduled events are GDP releases and inflation rate decisions, employment reports and the purchasing managers’ index reports.
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When using this strategy, traders can choose whether they want to trade before, during or after a news release.
- Before a news release: traders can enter markets when the conditions are less volatile, which is suitable for those who are less inclined to take risks.
- During a new release: traders who are skilled at analysing volatile markets can enter positions soon after a news release is announced, riding the waves triggered by the news.
- After a news release: traders can take some time to see the effect that a news release has had on the markets and take a calculated decision on what positions to open following the new data.
Here are 3 of the most important lessons to remember when trading the news in Forex:
- Volatility can strike at any moment
- Economic Calendars can help you prepare for upcoming market movements
- Spreads can temporarily widen during high-impact news releases, and this usually requires a greater margin.
Ready to trade the news?
With up to 1:500 leverage, swift crypto deposits and narrow spreads, trading the news has never been simpler thanks to LonghornFX. Sign up to the revolutionary broker at LonghornFX to start trading FX, Crypto, Stocks, Indices, Commodities and more through the award-winning MT4 platform.