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