The answer to the question you asked has to be a long one since there are a lot of factors that are involved when trading on basis of news releases. Consequently, I will post one part of the answer right now, then post the second portion after a couple of days, and the third and final part just in time for the weekends.
Be aware that the market for currency is made up of a complicated set of connections between various currencies. Certain may not seem apparent to the average trader, an example of this is currencies that are correlated unexpectedly with other currencies where one may end up losing any potential profit or risking doubling.
This is because the best trader will be aware of this when attempting to analyze the market. This means that, in order to conduct an accurate analysis of the impact of news releases, traders should be informed of other currency pairsapart from the currency they use for their interest.
Most traders accept that there are eight currencies that a knowledgeable trader should keep tabs on. Be aware that these are not the most important and are the minimum set of currencies in an accurate analysis. These currencies include the Japanese yen, the US dollar The Swiss Franc, the Euro and the Australian dollar as well as the New Zealand dollar, the British pound , and the Canadian dollar.
The savvy trader must always be on top of developments that affect these currencies. It is essential to keep in mind that, in addition to knowing when important news is scheduled to be released, the distinction between the actual results and the whisper values or numbers is extremely crucial in predicting how currencies will react to the actual announcement. Whisper values are only estimates or expected values which are simply the numbers which all expected to appear.
In the next installment of this series I will discuss the important reports and figures to watch as well as when they normally occur.
In the next part of the series that focuses on trading news that, by the way, is a bit late since it skipped my mind that I would be monitoring news from the G 20 this week, we will examine the important times where you should be paying attention to news reports. All the times mentioned here refer to Eastern Standard Time.
News releases from countries:
1. US 830 to 1000
2. Japan – 1850 to 2330
3. Canada – 700 to 830
4. United Kingdom – 200 to 300 to
5. Italy 345 to 500
6. Germany – 200 to 600
7. France – 245 to 400
8. Switzerland – 145 to 530
9. New Zealand – 1645 to 2100
10. Australia 1730 to 1930
These are the times that you need to be looking out for news from these countries. The next question is which important data you should watch out for. For economic news, as far as releases are concerned, you should be keeping an eye on the following:
1. Interest rate decision
3. Business sentiment surveys
4. Retail sales
5. Industrial production
6. Prices of Inflation, Consumer price or producer price
7. Surveys of the manufacturing sector
8. Consumer confidence surveys
9. Trade balance
Make sure to keep in mind that if you want to be a well-informed broker when it comes to trading news is concerned, you need to keep track of all these currencies, and every one of these economic events. It could seem like an overwhelming thing to do however many brokers provide what is called an economic calendar on their websites. You can get alerts on the upcoming events sent out to you, however for news that’s not expected is concerned, you’ll have the option of listening or read about it these times as mentioned earlier. Furthermore, it could improve your trading because it will help you get an insight into the market.
In the next installment we’ll look at trade-related implications of news releases. In this final installment on trading news releases, let’s consider the implications each time important economic figures are announced.
In the beginning, I want to point out that even if you’ve been trading on news releases for a few years, you need to note that reactions may alter based on a variety of factors and, in particular, the current economic conditions in the economic system. This is the reason it is vital to stay up-to-date with the current news releases since it will give you a glimpse of the markets pulse which will help you get an idea of what statistics are the primary concern of the market.
A question that has often encountered by new traders is, how long will the reaction to news announcements last? There have been studies prior to that, and they attempted to answer the duration of reactions to news releases. While it was seen that the market’s effects were most prominent during the first 48 hours following the news release, these effects were still evident going into the fourth day. It is safe to say that you’ll be able to see these effects in the first 96-hours following the release of a news item.
Another issue is what to do when trading the news. Most traders trade news through watching for the consolidation period , which usually precedes a big news release. They open positions and trade the breakout assume us the news is released. It is what the majority of traders do, so watch out also for an event where market expectations can become self-fulfilling predictions.
In the past one of the main reasons that made trading in the news a bit difficult was the issue of volatility. In the present, this issue is more apparent due to an unstable world economy. To avoid being burned, make sure you’re protecting your investments by putting stops on them. Additionally, it’s important to be able to develop an accurate sense of the market’s pulse in the different countries that you’re trading.
This level of attention to detail can distinguish excellent traders from ordinary traders, because like in everything else doing the extra mile can be the difference between a mediocre deal and a profitable one.