Trade Forex Trading

Forex News Trading, Analyzing Forex Economic Reports - A Guide to Fundamental Analysis

Before a trader can start news trading - the trader will need to first learn about Economic News Reports and learn where they can find these Economic News Reports that they will be using in their Fundamental Analysis Strategy. The Economic News Reports can be found on Economic Calendars. The Time Schedule for when these Economic Reports are released is also provided by these Online Economic Calendars.

Forex News Trading - Economic news releases often evoke strong moves in the currency market, creating a lot of shortterm trading opportunities for break-out traders.

However, not all economic news reports are tradable. Some of the news reports have a significant effect on the market while others do not have any effect. By looking at the forex economic calendar - traders can find out the significance of the upcoming forex news reports, find out whether the economic news report is worth trading or not.

The Forex news announcements are marked in terms of significance. There are three levels of significance: RED, ORANGE, GREEN. Most significant news reports are marked & labeled in red: the least substantial ones are marked & tagged in green, while those marked and labeled in color orange are in between.

There are two general approaches to trade forex news: Forex News Trading Methods

Trading the break-out channel

Forex Traders simply set Buy & Sell stop orders on both sides of a price channel, so when the economic news data comes out one of the orders will probably be hit. Although this news strategy is very simple, it also carries real risks of potentially hitting two orders: Buy & Sell as the market is shaken by the economic report. In such a double-hit situation forex traders will face losses on one or sometimes even both trades.

By analyzing the news report

Forex Traders can predict most probable outcome of the economic news by looking at the economic calendar fields labeled as Forecast and Previous. These figures are then compared with the economic data released to give an idea about the current economic situation.

Forex Traders watch the news report and pay attention to the actual numbers released. If the numbers come as a surprise meaning the news reports are not close to what was expected or forecasted, then fundamental analysts opening forex position according to the economic news reports. If the news report is better than expected then fundamental traders open Long positions. If the news reports are not favorable - traders open Short positions.

Most important thing you have to know and learn about forex fundamental analysis is the market expectation of an economic indicator. Economic analysts provide prediction of a probable market data or number of the economic indicator to be announced. This has an impact to the market and forex traders are positioned accordingly. When the economic indicator is released it impacts the market only when the news report is different from what the market expected. That happens because every data of the economic news report available to the public for information purposes is already taken into account by the traders when trading the market.

Example of Forex Trading News

The best news strategy, is one that is based on the economic calendar to time when the news release are to happen so as to trade these forex economic data reports. A trader will keep a schedule of these times and prepare how to trade the data before & after the economic data report is released.

One can get the times of when economic data are to be released by observing an economic calendar. The forex economic calendar contains the time-table of when forex news data reports are bound to be released. The forex calendar is compiled by Financial Analysts and Economist who study the fundamental news reports and economies of the world. This News Calendar will show the timetable for all the news reports announcements/releases lined up for the next 30 days.

By having this economic calendar a Trader can schedule when to trade these economic data reports well in advance. To get a copy of this calendar a trader can search for "Forex Calendar" and you'll find a couple of these forex calendars online hosted on various web sites.

An Economic Data Calendar will generally have 3 readings:

  1. Previous Reading

  2. Forecast
  3. Actual News

Previous Reading - This piece of the data shows the previous value/reading of a previous economic news reports. Most fundamental news reports are in the form of numeric numbers or percentages.

Forecast - Forecast shows the value for the news report that economic experts predict for that specified news report. This data is fore-casted way before the date of the economic data release. Economic Analysts and Economic Analysts will put across their forecast figures.

  • If the fore-cast number is better than the prior, Forex Traders will buy the currency associated with the good forecast
  • If the fore-cast number is worse than the previous, Forex Traders will sell the currency associated with the bad forecast

Actual News Announcement

This is what will determine if there will be a large forex price movement or none at all.

If the actual news data release is same to the forecast, then there will not be much movement, this is because Forex traders anticipated this data and have already transacted the news even before the actual economic data was released.

If the actual news release is not the same as the fore-cast, this will come as a surprise to the FX traders, if the forecast & actual info release is not the same then, the traders will have to adjust their forex trades accordingly & this will cause a price reversal in the opposite trend market direction.

If likewise the actual news data reading and value was way better than expected, then forex market will continue heading and going towards its direction and gain further momentum toward that direction. Likewise if the actual news report is worse than predicted, forex price movement will also continue in the same direction as the one of before the news release and this time gain more force and move further towards that direction.

Examples - Forex News Trading Example:

When the new info is announced/released then it has impact and effect on the market only if it is different than expected. If the news data information is as expected then it has no impact on a forex currency price movement because the information is already available to the public and has already been taken into account.

In order to use forex fundamental analysis, you should first be able to know economic market indicators - forex economic indicators. Forex Economic data calendar containing all the fundamental economic indicators is created by economists. Economists also make use of this Economic Calendar to predict different news reports. These predictions are provided for by market analysts. This can have great impact on the market. Traders will watch out for news announcements which have a substantial impact on the financial markets.

When are economic news released? - Forex News Trading Strategy

Forex News Trading - When are Economic News Released

Economic Data Reports Announcement Times of the major economies and major currency pairs traded and transacted in the market.

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