Currency trading is like weather prediction; one cannot identify the exact weather conditions that will prevail the day after. One can only predict and make appropriate changes in accordance with the same.
Currencies change their values too frequently to be predicted. Experts opine that one should invest much of his time, efforts and perseverance towards understanding the currency value trends. Thus, identifying best strategies is evidently crucial.
Best Forex news trading strategies involve incorporating the economic variables into predicting the currency value trends. Factors like inflation and unemployment play a major role in affecting how traders should reconsider putting that additional effort.
Before trading with news and understanding the impacts of economic variables on trading; one should understand implications of variables that affect your Forex news trader strategy. Time frame is one of the most important variables that determine your trading behaviour. Time frames determine whether one is scalping or trading on a long-term basis.
It also indicates whether one is trading with large/smaller pips or whether it is swing trading that one is interested in. A higher time frame gives a broader view of the currency value changes whereas zeroing in on smaller times throws light on recent price actions. The direction of the trend also determines whether traders will follow a definite trend or whether they would choose to trade in the opposite direction.
Using Best Forex news trading strategies:
Once you finish with identifying the type of your Forex economic news strategy, it is time to dive deep into trading intricacies. Trading with news presents a unique opportunity to understand the current economic conditions that one must take into consideration.
Random fluctuating movements might go against trader’s interests. Appropriate risk management strategies should club themselves with a proper understanding of the implications of each of the variable changes.
- Slingshot strategy:
This aims to push the trader further into the profitability zone even in case Forex news presents an adverse environment. Traders may use numerous entry/exit strategies that aim to scoop out the winning positions after predetermination of support and resistance levels. Thus if hourly trends exists, traders are advised to dive into that region to take advantage of the Forex strategies for news trading.
- Trading news reversals:
To add to the risk potential of Forex trading with news strategy, some traders prefer to trade with additional risk surrounding adverse news announcements like inflationary shocks.
Some opine that this requires a stronger investment backup and careful intervention with support/resistance levels. However, sometimes traders prefer trading with prices alone by trying to decipher the impact of news announcements on currency price movements.
- Long-term news effects:
Consider some massive economic/social shocks that may affect how currency prices change their behaviour. Sometimes potential saddle points can stop trends and create reversals. Although best Forex news trading strategies can be predetermined, there are positions which require the traders to look for that opportune moment depending on the bullish/bearish currency pair behavior.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.