What is News Trading?

Every day billions of dollars are routinely exchanged with other currencies for imports, exports and tourism. Government officials report measurements of currency flows, and related factors such as inflation, unemployment, GDP growth, and interest rates policies.

News traders pay attention to these announcements. Successful news traders know:

  • when to expect news
  • where to find data forecasts
  • how to get into position to profit from announcements.

News traders do not rely solely on charts or technical analysis. Instead, news traders focus on what news can affect the markets, and how other investors will likely respond.

A rule of thumb:

When there is news that will contribute to an interest rate rise-- the value of that currency typically rises too.

Learn more about pioneering news research

It’s no secret why news moves the market

News moves markets for a reason. When one country raises an interest rate, for example, fund managers may take the opportunity to move millions of dollars in a low-interest paying currency to an account in a higher-interest paying currency.

Tip --> Think like a bank trader. Remember:

    1. Currencies are an asset class, just like stocks and bonds.
    2. The interest rate is the yield on that asset.
    3. It pays to put your money in the currency with the highest interest rates.

Not all news moves the market

Many financial players are forward looking and anticipate movements in advance. When the markets anticipate news, an announcement may have no effect. In this case, we say the information is "priced in."
When information is already priced in, your opportunity to profit may arise when expectations are wrong.

Knowing the Indicators that Matter

FXTE has researched the effects of news on exchange rates. We track which indicators contribute to decisions about interest rates, including consumer confidence, manufacturing surveys, housing starts, unemployment, and inflation. Although in principle every news item on these subjects could impact markets, in practice only few do.

Successful news traders invest time learning about indicators, their sources, and how they have affected markets in the past.

There are opportunities to trade news daily in foreign exchange. Learn more about daily opportunities.

Examples of General Economic Indicators:

  • Inflation (CPI)
  • Growth (GDP)
  • Non-farm payroll
  • Retail sales
  • Housing starts
  • Consumer confidence
  • Manufacturing Surveys
  • Plus dozens more

    • Tip --> It’s not the direction of the data, it’s the difference from expectations that matters.

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    4 steps to Success

    Forex trading can be very rewarding when you follow the steps and learn the skills and you need to succeed.

    1. Know the market.
    2. Balance your analysis.
    3    . Practice wealth-building.
    4. Plan your success.

    † Trading spot currencies involves substantial risk and there is always the potential for loss. Your trading results may vary. Because the risk factor is high in the foreign exchange market trading, only genuine "risk" funds should be used in such trading. If you do not have the extra capital that you can afford to lose, you should not trade in the foreign exchange market. No "safe" trading system has ever been devised, and no one can guarantee profits or freedom from loss.

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