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- How to Trade the News Using the Straddle Trade Strategy
- Forex trading | CFD trading | UK
Tutorial : Top 65 Forex Trading Rules
Which Currencies Should Be Your Focus?
The following are the eight major currencies:
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Economic releases can be traded either proactively or reactively. Trading proactively involves taking an educated guess on whether a piece of data will surprise to the upside or downside and placing the trade before the number is released. This is not as mind boggling as it first sounds and a Masters Degree in Economics is certainly not needed but oftentimes traders find it too challenging and opt to trade reactively, which involves placing a trade after the economic data is released. This removes the need to “guess” the economic data but can also remove any initially advantageous knee-jerk reactions.
How to Trade the News Using the Straddle Trade Strategy
European central banks and the US Federal Reserve usually release their rate decisions during the first week of each month. As most of the important data are released during this first week from around the world, traders are exceptionally nervous and excited, amplifying volume greatly, but also increasing volatility, as the large amount of short term speculative money opens and closes very short-term positions. In fact, some traders turn the typical movements of this period into a trading strategy.
Forex trading | CFD trading | UK
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In Chart #7, which is the same USD/CAD chart shown above entry points for proactive and reactive trading. In both cases, the trade would have been profitable but profits are never guaranteed particularly when trading news, which is why using stops is very important. In the case of USD/CAD, had we been greedier and decided to ride the trade through the non-farm payrolls report, it would have been a disaster.
Trade Balance - Along with the current account data, the trade balance for a country can significantly impact the valuation of its currency.
Specifically, closely watched economic news items such as the United States' Non-Farm Payrolls and, Gross Domestic Product numbers tend to result in significant reactions in the forex market, especially if they differ substantially from the market's prior expectations.
6. Interest rate decision
7. Retail sales
8. Inflation (consumer price or producer price)
5. Industrial production
6. Business sentiment surveys
7. Consumer confidence surveys
8. Trade balance
9. Manufacturing sector surveys
Now that you 8767 re prepared to enter the market in either direction, all you have to do is wait for the news to come out. Sometimes you may get triggered in one direction only to find that you get stopped out because the price quickly reverses in the other direction. However, your other entry will get triggered and if that trade wins, you should recoup your initial losses and come out with a small profit.