Many new forex traders who open an account with HYCM are keen to learn about trading on breaking news and events and those who have had some exposure to trading the financial markets will be aware that news can impact on anything from company stock prices to currencies.
The stock markets and company stock prices, for example, can generally be influenced by geopolitical events such as war. Any hint of political conflict will also likely impact on the price of crude oil, sending it soaring, especially if the country is a major oil exporter. Since stocks and oil are negatively correlated, increasing oil prices caused by political uncertainty tend to also send stock prices falling. Additionally, government elections can create an impact and have real knock-on effects on the markets.
How to Trade News & Events
To trade on news and events, you need to be aware which economic releases are coming up by checking an economic calendar. You will soon grasp which piece of data is important and how news can impact on a particular event. Generally speaking, the most important economic releases for any country are interest rates, inflation, unemployment and retail sales.
One of the most popular ways to trade forex on news involves currencies. Currencies are especially prone to short-term movements brought on by the release of economic news from the US and the rest of the world. To trade news successfully, you need to keep important considerations in mind like knowing which releases are expected and when, as well as which one are most important given the current economic or political conditions.
For example, a lot of traders trade on the US Non-Farm Payrolls report which is released every first Friday of the month. This report reveals how many new jobs were created or lost in the US in the previous month. A favourable report usually positively impacts on the dollar and a poor jobs report vice versa.
Related : High Impact Forex News
Elections also have an effect on a country’s currency and traders acknowledge them as potentially creating political uncertainty or instability resulting in greater volatility in the value of a country’s currency. Typically, this instability will override any positive predicted outcomes from a new government in the short-term and any related currencies will probably experience losses. It is therefore possible to capitalise on this current geopolitical situation by choosing the relevant currency to trade, e.g. EUR/USD. If you execute a successful trade, there is the potential for rewards.
Practice Makes Perfect
It is clear that current affairs can have a noticeable effect on the markets, leading traders to take advantage of this volatility. While it is not so easy to plan for the unexpected in the markets at times like this, informed traders will be quick to react to global events. Researching relevant information and following the trends in times of political conflict or uncertainty will allow you to make quick, informed decisions regarding your trades.
Above all, it is worth remembering that practice makes perfect and you are encouraged to practice and perfect forex strategies with the help of HYCM’s education suite. Doing so will ultimately place you in the best position to make a success of your trading activities.