Movement in forex market is frequently preceded by release of Fx news. Fx news refers to any major news releases which cause the forex market to react For example the US Non-Farm Payroll release (which is primarily an indicator of unemployment levels), Consumer confident reports and manufacturing data have the ability of causing significant forex market movements.
Trading the fx news releases is not easy. Novice traders often think that profits are certain when trading any major news. However unless you are able to accurately predict the exact time when the market will react to the news, you cannot take profits for granted.
How to go about trading news?
o Have a trading strategy in place and plan well in advance of the news release
If you decide to trade news have a sound strategy in place. To begin with calculate the support and resistance points for the currency pairs you wish to trade in. Thereafter determine entry and exit points which in your opinion are ideal. Remember to plan this out well in advance of the expected time of the news release. Timing is very crucial when you are trading forex information. For more info please visit these sites:- creditkranti.com
o Combine Scalping Strategy and Breakout Strategy
Normally prior to release of any major news the market will be dull and stagnant for a few hours or at times even a full day. During this stagnant period, many currency pairs follow a tight consolidation pattern. The price movements will be restricted and range from 30 to 40 pips only. This would be an excellent opportunity to enter at your predetermined levels and exit after earning 20 to 30 pips. There is no point in being greedy and holding your position once you make a reasonable amount of profit. Remember even before you realize it the currency pair reversal may have happened causing the prices to fall.
o Forget about recovery once the reversal happens
Lastly once the reversal occurs do not hope for a recovery. If you notice a strong reversal while in an open trade transaction, exit immediately even if your profit target is not met. You will at least minimize your loss.
Normally all traders do not have the requisite mental make up for trading fx news. Only those traders who have the mental capacity to cope with stress and react in a timely manner should consider trading news.