Learn to Trade Currency Market with News Releases, Country and Fiscal Data
Forex operation is considered to be a relatively profitable and in parallel too luck-based endeavor. Speculators who wish to take part in the market opt to choose from various tactics that operate differently within different Forex market conditions. Some of these strategies are based on the chart indicators, price and chart patterns. A small amount of traders prefer to use the fundamental analysis as the main basis for their position taking. In spite of this, trading on foreign exchange market news, macroeconomic and monetary indicators (such as interest rates) can be very profitable, especially if you get current market info.
The primary foundation of the fundamental or news operator should be a thorough analysis of the macroeconomic indicators that determine the potential of the given currency. It’s quite important to read the news and be current with the most current picture of the fundamental situation in a specific country or a monetary union. Fortunately enough, there are not too many of important fundamental reports that should be followed, unless, of course, you are trading too many currency pairs, including the exotic ones (which isn’t a recommended decision if you want to reach an expertise level in fundamentals). To point the few indicators worth following I’d mention total output, employment rate, real estate market indicators, inflation, industrial output and productivity, export and import prices, credit, PMI indicators, etc.
Another vital long-term aspect that can be used by the fundamental traders is the interest rates set by the global central banks. The lower is the rate the more attractive it’s to borrow the currency and utilize it to purchase a more high-yielding asset. It leads to the falling of the borrowed currencies. Quite often the asset bought with this low-yielding currency is some other currency that is associated with a higher funds rate, which leads to strengthening of the latter. It is popularly known as carry trade. Expert currency speculators follow and try to predict the interest rate changes and speculate with their assets accordingly, trying to gain from both the interest rate difference and the currency appreciation.
A good example of Forex news trading action can be to go long on NZD/USD instantly after some economic report that shows a worsening in the U.S. economy. It’s not that difficult but can be associated with some risks as the rate usually moves with a very high volatility during these reports. It’s normally a brilliant idea to wait for some time after the news and hope for a long-term trend setup.
But if you plan to speculate the FX market news frequently by entering positions immediately after the news releases, it’s very important to get an honest Forex broker for your order handling. The majority of brokers widens their currency spreads largely during the news releases and also fails to place orders by sending “requote” message. It’s a must to check whether the brokerage allows normal trading during the news before using the strategy with the real money.
An accurate source of the economic information is also very important if you want to become a news or fundamental trader. First, you should be up-to-date with the most recent fundamental indicators – financial news websites and the official sites of the government statistics are good for that. Second, you’ll need some source of the latest news – financial calendars and up-to-moment Forex news sites are a good solution here.
If one wants to get the knowledge of the recent changes in the foreign exchange market and the related economic indicators, it’s a good idea to add to favorites this Forex news web resource and be current with all the important developments. One will also find useful the interest rate table, which consists of the current updates from the 20 most influential global central banks.
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