Analyzing Economic Reports
What Are the Different Types of News Strategies?
XAUUSD News Trading - xauusd economic news reports released often evoke strong market moves thus creating a lot of short term xauusd opportunities for breakout news traders.
However, not all news reports are tradable. Some of the news reports have a significant effect on the market while other news reports don't have any effect. By looking at the xauusd calendar - news traders can find out the significance of the upcoming news reports, find out whether the economic news report is worth trading or not.
The different news reports are marked in terms of significance. There are three levels of significance: RED, ORANGE, GREEN. The most significant news reports are marked in red: the least significant are marked in green, while those marked in orange are in between.
There are 2 general analysis methods to trade news: News Analysis Methods
Trading the break out channel
XAUUSD News Traders simply set Buy and Sell pending stop orders on both sides of a price channel, so when the news data comes out one of the pending orders will probably be hit. Although this news method is very simple, it also carries real risks of potentially hitting two orders of Buy & Sell as the market is shaken by the news report & there is market price volatility. In such a double hit situation news traders will make a loss on one of the trade or sometimes even both of the gold trades.
By analyzing the news report
XAUUSD News Traders can predict most likely outcome of the news by analyzing the calendar fields labeled as Forecast & Previous. These figures are then compared with the news data reports released to give an idea about the current economic situation.
XAUUSD News Traders watch the news report & pay attention to the actual numbers of the news report released. If the news report numbers come as a surprise meaning the news reports are not close to what was forecasted or expected, then news analysts opening position according to the news reports. If the news report released is better than expected then news traders open Buy Long positions. If the news reports released are not favorable - news traders open Sell Short trades.
The most important thing you have to know about news analysis is the market expectation of an economic news indicator. Economic analysts provide a prediction of a probable number of the economic news indicator to be announced. This has an impact to the market and news traders are positioned accordingly. When the economic news indicator is announced it affects the market only when the news report is different from what the market expected. That happens because every data of the news report available to the public information is already taken into account when trading.
Example of News Analysis
The best news analysis strategy, is one that's based on the calendar to time when the news release are to happen so as to trade these trading economic data reports. A news trader will keep a schedule of these trading report news release times and prepare how to trade the data before & after the news data report is released.
A news trader can get the specific times of when news data reports are to be released by observing a calendar. The calendar contains the time table of when news data reports are bound to be released. The calendar is compiled by Financial Analysts and Economist who study the news reports & economies of the world. This Economic Calendar will show the timetable for all the news releases scheduled for the next 30 days.
By having this calendar a News Trader can schedule when to trade these news reports well in advance. To obtain a copy of this calendar a news trader can search for "XAUUSD Calendar" and you will find a couple of these calendars online hosted on various online xauusd sites.
An Economic XAUUSD Calendar will normally have three readings:
- Previous Reading
- Forecast Reading
- Actual News Report
Previous Reading - This piece of the news data shows the previous value or reading of a previous news reports. Most news reports are in the form of numeric numbers or percentages.
Forecast Reading - Forecast shows the value for the news that economic experts predict for that particular news report. This value is forecasted way before the date of the economic news data release. Economic Analysts & Financial Analysts will put across their forecast.
- If the forecast number is better than previous reading, News Traders will place a buy trade associated with the good forecast
- If the forecast news report number is worse than previous reading, News Traders will place a sell xauusd trade associated with the bad forecast
Actual News Release
This is what will determine if there'll be a large price movement or no price movement at all.
If the actual news data release is same to the forecast, then there will not be a lot of movement, this is because news traders anticipated this data & have already traded the news even before the actual economic report was released.
If the actual news release is not the same as the forecast predicted, this will come as a surprise to the news traders, if the forecast predicted & actual news data release is not the same then, the news traders will have to adjust their trades according to the news report released & this will cause a price reversal in the opposite direction.
If likewise the actual news data report was way better than expected, then the price will continue moving towards its direction and the price will gain more momentum towards that direction. Likewise if the actual news report is worse than the forecast predicted, price movement will also continue in the same direction as that of before the news report release & this time gain further momentum and move further toward that direction.
Examples - News Example:
When the new news information is announced then it has impact on the market only if it is different than expected forecast. If the news data information is as expected then it has no impact on a price movement because the information is already available to the public & it has already been taken into account when trading the market.
In order to use news analysis, news traders should first learn and know economic indicators - xauusd economic indicators. Calendar containing all the fundamental indicators is developed by economists. Economists also use this Economic xauusd calendar to predict different news reports. These news reports predictions are provided by market analysts. These news reports can have great impacts on the market. News traders will watch out for news announcements that have a great impact on the price market moves.
When are news reports released? Types of News Analysis
Various Types of News Analysis - XAUUSD Forex News Strategy - What Are the Different Types of News Strategies?
