What News Affects The Forex Market

What News Affects The Forex Market – One of the great advantages of forex trading is that the forex market is open 24 hours a day, five days a week (Sunday 5:00 PM to Friday 4:00 PM ET). As markets move on news, economic data is often the most important catalyst for short-term moves. This is especially true for the currency market, which reacts not only to US economic indicators, but also to news from around the world. Here we look at what economic numbers are released, what data is most relevant to forex traders and how traders can act on this market-moving information.

With at least eight major currencies available for trading at most forex brokers, there is always a provision to release economic data that forex traders can use to make informed trades. In fact, almost every day of the week (excluding holidays) seven or more dates are published from the top eight most watched countries. So there are many options for those who choose to trade news. Eight major currencies are familiar to most traders:

What News Affects The Forex Market

Easily tradable currencies span the globe. This means you can manually select the currency and economic expenses you pay special attention to. However, as a general rule, since the US dollar is the “other side” of 90% of all foreign exchange transactions, releases from the US economy have the most pronounced impact on foreign exchange markets.

What Is News Trading Strategy And How To Use It In Forex Trading?

Business news is tougher than you might think. Not only the reported consensus score is important, but also the whispered numbers (unofficial and unpublished forecasts) and any revisions to previous reports. Also, some versions are more important than others; it can be measured both by the importance of the country issuing the data and by the importance of the release in relation to other data to be released.

Figure 1 shows the approximate times (Eastern time) of the most important economic expenditures for each of the following countries. These are also times when forex market participants pay close attention to the markets, especially when trading on press releases.

When trading the news, the first thing you need to know is what releases are coming this week. Second, it is also important to know which data is important. In general, the most important information relates to changes in interest rates, inflation and economic growth such as retail sales, manufacturing and industrial output:

Depending on the current state of the economy, the relative importance of these releases may change. For example, unemployment may be more important than trade or interest rate decisions this month. That’s why it’s important to keep an eye on what the market is currently focusing on.

What Is Forex (fx) Trading And How Does It Work?

According to a study by Martin D. D. Evans and Richard K. Lyons, published in the Journal of International Money and Finance (2004), the market may still absorb or react to press releases hours, if not days, after publication numbers.

The study found that the effect on yields usually occurs on the first or second day, but the effect appears to last up to the fourth day. On the other hand, the impact on buy and sell order flow is still very pronounced on the third day and can be seen on the fourth day.

The most common way to trade the news is to look for a period of consolidation or uncertainty before a big number and trade a breakout behind the news. This can be done short-term (during the day) or longer. several days. As an example, let’s look at the chart in Figure 2. After the weak September figure, the euro held its breath ahead of the October figure, which was expected to be released in November.

In the 17 hours before the launch, EUR/USD was limited to a 30-point trading range. (Pips are the smallest indicator of change in a currency pair in the forex market, and since most major currency pairs are priced to four decimal places, the smallest change is the last decimal point.) This would have provided an excellent opportunity for traders to news. to make a breakout trade, especially since the probability of a quick move at this time was extremely high.

Factors That Affect The Forex Market

The chart above illustrates – with two horizontal lines forming a trading channel – the indecision and uncertainty leading up to the October non-farm payrolls figures released in early November. Notice the spike in volatility that occurred after the numbers were released.

I’ve mentioned before that business news is harder than you might think. Why? The main reason is volatility. You may make the right move, but the market may simply not have the momentum to support the move.

As an example, let’s look at the chart in Figure 3. This chart shows activity after the same release shown in Figure 2 (but over a different time frame) to show how difficult trade news releases can be. On November 4, 2005, the market expected wages to increase by 120,000 jobs, but instead the US economy gained only 56,000 jobs. The disappointment caused the dollar to sell off about 60 points against the euro in the first 25 minutes after the release.

However, the dollar’s upward momentum was so strong that it quickly reversed, and an hour later EUR/USD broke the previous low and effectively hit a 1.5-year low against the dollar. There were plenty of opportunities for breakout traders, but the dollar’s rate of growth was so strong that such a weak wage could not support the currency’s rise. One thing to keep in mind is that a strong move on the back of a good number goes a long way.

The Most Important Forex News

The chart above shows that while the weaker-than-expected non-farm payrolls figures briefly lifted the EUR/USD, the strong momentum in the US dollar managed to take over and move higher. Watch when the US Dollar appreciates against the Euro.

One possible response to bursts of volatility without facing currency risk is exotic options trading. Exotic options usually have barrier levels and will be profitable or unprofitable depending on the breach of the barrier level. The payout is predetermined and the premium or option price is based on the payout. Below are the most popular types of exotic options to use for trading press releases.

The dual one-touch option has two barrier levels. One of the levels must be breached before expiration for the option to become profitable and the buyer to receive a payout. If no barrier level is breached before expiration, the option expires. The double one tap option is a great opportunity to trade on press releases because it is a pure non-directional play. As long as the barrier level is exceeded – even if the price subsequently reverses course – the payment is made.

The one-touch option has only one level of barrier, which usually makes it slightly cheaper than the one-touch option. The same criteria apply – the payout is only made if the barrier is breached before expiration. This is a good option to buy if you really have an opinion on whether the number will be stronger or weaker than the market consensus forecast.

Forex Market Hours

Forex options are a viable alternative for those who don’t care to be overwhelmed by excessive market volatility before actually seeing the spot price move in the direction they want; There are different types of currency options available through some currency brokers.

The no-touch double option is the exact opposite of the one-touch double option. There are two barrier levels, but in this case neither barrier level can be breached before expiration – otherwise the option is not paid. This option is great for news traders who believe there will be an economic release

The currency market is particularly susceptible to short-term fluctuations caused by the release of economic news from both the US and the rest of the world. If you want to successfully trade the news in the forex market, there are several important considerations: knowing when the news is coming, understanding which releases are most important given current economic conditions, and of course knowing how to trade based on these changing markets. data. . Do your research and stay on top of the economy and you too can benefit.

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How To Use The Ppi In Forex Trading

Negara-negara di seluung dunia secara teratur sistikum statistik pelacakan behang-bidang seperti pasar tenaga kerja, gross domestic product (GDP), retail sales and mereka inflation.

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