One of the key factors to understand the currency pair movements in Forex is to trade on the news. It is important for both the beginner and the expert trader to work forex trading on news release, who aims to improve his professionalism in Forex.
The FX trader must follow the news calendar for the proper planned trading period daily in the preparation of a trading strategy.
— knowing the exact time period when strong news to be released.
— know how the market works when you hear the news.
— Combine technical analysis and news.
You must need to know what information affects the market more dynamically and what doesn’t. It’s very straightforward. Trade technique which has developed over many years shows that there are already some economic circumstances that have a considerable impact on currency exchange rate movement.
Some of Market Impacted News:
- Inflation rate.
- Industrial production.
- Central bank interest rate decisions.
- GDP Rates.
- Business activity indices.
- Official Speeches.
In the Forex market, really very rarely unexpected news is released. All news is normally planned on the market. The FX exchange market actually wants this news to be released and seeks to prepare for it in all possible ways. Before the news is officially published, the experts predict how the exchange rates may work.
Possible Market Reaction:
- The news should meet expectations, one or other currency’s exchange rate would not substantially change.
- Where forex analysts have given a correct forecast, but market consequences have not been fully assessed, then the exchange rate will remain moving in the prescribed direction, but there may be an increase in exchange rates.
- If the experts from Forex have mispredicted, the exchange rate will change to the opposite direction.
When analyzing the effect of fundamental data on exchange rates, the direction of the trend must be taken into account. If the news is contrary to the trend, it assumes this type of news is not going to have a long impact and will last for only some hours. If the news published fully aligns with the prevailing trend, then the trend will speed up.
You have to remember that, when news from the Forex Markets comes out, you can only make the most of the use of the fundamental principles of analysis if this information is associated with technical analytical data.