HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
XM information and reviews
XM
86%
NordFX information and reviews
NordFX
86%

How to Trade Forex on News Releases


A great advantage of trading currencies is that the forex market is open 24 hours a day, five days a week. Markets move because of news, so economic data is often the most important news for short-term movements. This is especially true in the forex market, which responds to US economic numbers, and to news from around the world. Before developing a strategy to trade forex on news releases, you must consider which news events are most relevant to trading forex and are worth trading.

The reason to trade the news is because it increases volatility in the short term, so obviously you should only trade news that has the best market-moving potential for the currency market.

The Key News Releases

When trading news, first you need to know which releases are actually expected that week. Knowing which data is important is also key. In general terms, the most important information relates to changes in interest rates, inflation, and economic growth, like retail sales, manufacturing, and industrial production.

If you refer to the Economic Calendar, you will notice that the most important events usually relate to changes in interest rates, inflation, and economic growth, like retail sales, manufacturing, and consumer sentiment.

Here are some examples:

The relative importance of these releases may change depending on the state of the economy. Therefore, it is important to keep on top of what the market is focusing on at that specific moment. This is also dependent on what is currently happening in the world at the time.

For example, interest rate decisions may be the main focus during a certain time, so it is important to stay informed and know what the market is focusing on at any moment. The news that usually drives price action and produces volatility includes:

The markets react to most economic news from different countries, but the biggest market-moving news comes from the US. The United States is still considered the world’s most powerful country and it still has the largest economy in the world. The USD participates in about 90% of all forex transactions, which makes US news and data important to follow.

Some of the most volatile news for the US include inflation reports and central bank speeches but also geopolitical news such as:

These may not have as big an impact as the other news, but they are still significant. The next step is to determine which currency pairs you should trade.

Choosing Currency Pairs to Trade the News

It is important to choose the appropriate currency pair when trading the news. You should take advantage of the short-term spike in volatility while keeping your transaction costs as low as possible. News can bring increased volatility in the forex market and more trading opportunities, so it is essential that you trade currencies that have deep liquidity. Currencies with deep liquidity have the tightest spreads, so you can keep your transaction costs low. The major currency pairs have the most liquidity and usually the tightest spreads.

The following currency pairs show the liquid pairs derived from the eight major currencies:

Spreads widen when news reports come out, so it it is wise to choose those pairs that have the tightest spreads. Now that you are aware of which news events and currency pairs to trade, let us consider some approaches to trading the news.

How to Trade the News

The most usual way to trade news is to look for a period of consolidation or uncertainty ahead of a big number and to trade the breakout on the back of the news. You can do this on a short-term basis as well as over several days. Trading news is not as easy as you might think. The main reason is volatility. You may make the right move, but the market may not have the momentum to sustain the move.

Final Thoughts

The currency market is particularly susceptible to short-term movements generated by the release of economic news from both the US and the rest of the world. If you want to trade news successfully in the forex market there are a few important things to consider such as knowing when reports are expected, and understanding which releases are most important given current economic conditions.

Also important is knowing how to trade based on this market-moving data. Just do your research and stay on top of economic news so you will be able to gain the rewards of trading the news.

#source


RELATED

Synthetic and Crypto Currency: What Are They, How to Create and Use Them

The set of trading tools that NordFX offers to its clients is a whole arsenal that allows a trader to apply the most effective strategies and win on the fields...

Exploring The Limitations Of Fundamental Analysis: A Comprehensive Perspective

Fundamental analysis is a method used to evaluate securities by examining the underlying factors that influence their intrinsic value. It involves analyzing both qualitative...

Deep-Dive With Us: What Is Tron?

What comes to mind when you think of the word "Tron?" For some, it's a cheesy 80's movie. For others, it's a promising blockchain platform. In today's article, we'll take a look...

Which US companies can increase dividends despite COVID-19

The US economy has entered a deep recession since the beginning of the COVID-10 pandemic, and American corporations along with it. Dividends are in jeopardy...

The Dynamics of Commodity Trading: An In-depth Look

From the very clothes on your back to the coffee you sipped this morning, commodities influence our daily lives. This vast market encompasses a wide variety of goods...

The Ethereum Merge: Everything You Need To Know About The ETH

Traders keep a close eye on all things related to the cryptocurrency industry, especially notable events that could change the landscape of the industry as we know...

Short selling as a way to profit

Short selling is a method of stock trading that allows investors to profit from an investment vehicle that is going down in value and that they do not own...

Can you make money with crypto arbitrage?

Crypto arbitrage is the practice of and methodology behind taking advantage of price fluctuations in the price of various cryptocurrencies, such as Bitcoin or Ethereum. These variances...

What are Expert Advisors?

Expert Advisors (EAs) are automated programs that run on the MetaTrader 4 (MT4) or MetaTrader 5 (MT5) trading platforms. They are algorithms that can be used...

Step-by-step guide about bitcoin trading

When Satoshi Nakamoto created bitcoin in 2009, nobody taught it would be a worthy coin, let alone being recognized and accepted as a means of transaction worldwide...

All you need to know about how to trade cryptocurrency

Cryptocurrencies have received devotion from millions of investors across the globe due to cryptography and transparency of transactions. They have started...

Security Tokens Versus Utility Tokens: Which Is Better?

The cryptocurrency industry is vast and diverse. There are DeFi tokens, non-fungible tokens (NFTs), Bitcoin, altcoins, and much more. The categories of crypto assets...

What is spot trading in crypto and how does it work?

In a spot market, traders can immediately exchange their cryptocurrency for fiat currency or another cryptocurrency by placing a buy or sell order...

Stocks CFDs That Could Get a Boost on Black Friday

As the busiest shopping season of the year approaches, consumers are getting ready to open their wallets and swipe their cards away. However, this season is not only...

Bitcoin Investment: A Guide To Trade Bitcoin

As you may already know, cryptocurrency, especially bitcoin, is the most traded financial instruments in recent history. Bitcoin is a popular digital currency among...

The Complexities and Nuances of Touch Trading: A Comprehensive Analysis

Touch trading, a strategy employed in the volatile world of forex trading, is a sophisticated approach that requires traders to enter the market at a precise intersection of live price impact with a predetermined price level...

Where will the COVID-19 pandemic lead the United States?

Last week, US government debt set a new historical maximum. The milestone of $25 trillion was taken. The situation deteriorated sharply in April 2020 due...

Five Bitcoin Day Trading Setups to Help You Make Money

Day Trading is trading that moves fast. It involves making multiple trades in a market on a single day, quickly reacting to price fluctuations to make lots of small margins...

High Frequency Trading (HFT) in the World of Retail Trading

High Frequency Trading, better known by its acronym HFT, is a buzzword in the forex trading industry. As the world of trading evolves with the rise of technology, the line between large institutional traders...

How to Create NFT Art?

NFT stands for non-fungible token. This is a unique token on a blockchain that cannot be replaced with something else. For example, Bitcoin is fungible...

Vantage information and reviews
Vantage
85%
FP Markets information and reviews
FP Markets
81%
IronFX information and reviews
IronFX
77%
T4Trade information and reviews
T4Trade
76%
Exness information and reviews
Exness
76%
Just2Trade information and reviews
Just2Trade
76%

© 2006-2025 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.