Over the years, foreign exchange trading has become more and more popular. Today, the forex market is worth billions of dollars. Currency pairs are traded on the market round the clock among traders from all parts of the globe. Many traders use a litany of different strategies in order to maximize their profits. Like any other financial market, the forex market is also highly volatile and reacts violently to news from different parts of the globe. While the influence on the market is relatively little from other parts of the globe, the market’s biggest movers come from the United States.
The reason for that is pretty simple: the US economy is the biggest in the world and the Dollar is the reserve currency used by world banks all over. Forex news trading has become a viable strategy for many people who are interested in trading the news and looking to make quick money. However, before we consider different forex news trading strategies, it is important to highlight the news events that are even worth trading on.
Remember that news trading is only done due to increased volatility in the short term. Therefore, it stands to reason that most people only trade on news events that have the highest amount of moving potential. Now, according to statistics and previous studies, you will need to pay attention inflation reports, talks between central banks as well as geo political news from different countries. For instance, war, political instability, unrest, natural disasters and elections can all have a significant impact on the forex market.
While they may not have such a huge impact as compared to other news, it is still worth paying attention to these events. Most importantly, when looking at the news, you should always pay attention to the stock market movements. In certain cases, the movement in the stock market may lead to some serious moves in the forex market. A prudent forex trader always keeps himself up to date with the latest happenings around the globe.
One thing that you should know about trading forex news is that there are only a handful of currency trading pairs that yield the best results. Due to increased volatility in the forex market, it is imperative that you only dabble with currencies that are liquid. At least you will have the assurance that the orders will be executed quickly without any problems. Here are some of the currency pairs that you should focus on:
As you can see, these are all major currency pairs. However, because they have the highest amount of liquidity, most major currency pairs have very tight spreads. Now, if you want to follow the forex news trading strategy, you should trade as soon as the news is released. That’s when the spreads widen out, thus allowing you to make more money on every trade you make. This is just some brief information on how the forex news trading strategy works.