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%
Exness information and reviews
Exness
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

Living Through Economic Crisis: Top Hedging Instruments in 2022

There has been absolutely no doubt that the post-pandemic global economy will be recovering at a turtle pace. But instead of a gradual recovery, the economy has plunged into a rapidly...

A Complete Guide On How To Trade Cryptocurrency CFDs

Since the advent of the first cryptocurrency in 2009, the use of cryptos has grown from ordinary unnoticed blip on a computer to a currency the entire world is now...

Why trade futures?

In this article, we’ll be taking a deep dive into the future. We’ll touch on the types of assets that can be traded using futures, and the advantages and general why trade futures from the global traders...

Advantages Of Using AMarkets VPS for FX Trading

VPS is short for a virtual private server and it’s widely used for trading in the financial market. The VPS hosting service will be especially useful for traders who prefer...

Understanding Countertrend Trading: Everything You Need To Know In 2022

You have to admit, the phrase "countertrend trading" itself sounds quite strange, and it's hard to hear. It's like "driving on the wrong side of the road". Is it really possible?

10 Tips for trading on ECN accounts

The main idea of bulding an ECN system is to create a technology that allows transactions to be made without the involvement of intermediaries as much as possible...

Gold at 8 years highs. Why so and who will benefit from it?

The business of storage operators with a high level of security, in which physical, not virtual, metal is stored, is in a boom of demand from wealthy investors...

Top up with stablecoins at FreshForex

Stablecoins are a class of cryptocurrencies tied to traditional currencies, and also physical assets (energy, precious metals, etc.). Stablecoins are not subject to strong...

Stock trading: Advantages of trading shares

Start trading global shares through circus platform, which is a modern and well-developed platform that can assist you in navigating the whole trading process...

Complete Guide to precious metals trading

Both Gold and Silver are considered valuable metals and have been chosen by various clients for years now. Nowadays, precious metals trading...

When a fracture in the spread of COVID-19 pandemic can be expected?

The fall in global financial markets, which began in February 2020, is associated with the COVID-19 pandemic...

Cryptocurrency Volatility at Forex

There's no doubt that cryptocurrency volatility has helped some people to grow their wealth in a very short time frame. It is equally...

Swing Trading: a Trading Style for Professionals

The classification of traders might seem sketchy. However, there is a clear division between them based on the period of holding an open position...

What Is The ERC-20 Ethereum Token Standard?

Although Bitcoin was the first ever cryptocurrency that started the entire crypto and blockchain revolution, Ethereum could be the biggest evolution to hit crypto yet...

The Relationship between Gold and the USD

If you have been reading our research articles, you must have seen that our analysts very often talk about the negative correlation between gold and the US dollar...

How to trade cryptocurrencies

Cryptocurrency trading has become highly popular over the past year. The crypto market has grown tremendously, with global market capitalisation reaching a trillion-dollar valuation.

The Importance of Having a Forex Trading Plan

When approaching a field like forex trading where personal decisions translate into profits or losses, having a well-outlined and easy-to-follow plan can make the difference between success and failure...

Best Forex Expert Advisors for Profitable Trading in 2022

As many of you know, the foreign currency markets are open for trading 24/5, which makes it very hard for a human to keep track of everything that's going...

Understanding of how to invest in oil

Oil is among the most commonly used commodities in the world, and its price affects the prices of many other commodities, such as gasoline and natural gas...

Why Do Markets Fall?

No financial market, including Forex market, can grow without a recoil for a long time. Inevitably on the chart will be formed "waves" against the movement...

FP Markets information and reviews
FP Markets
81%
IronFX information and reviews
IronFX
77%
T4Trade information and reviews
T4Trade
76%
Just2Trade information and reviews
Just2Trade
76%
FXNovus information and reviews
FXNovus
75%
Riverquode information and reviews
Riverquode
75%

© 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.