News is any piece of information that is significant for a journalist and for people to know the relevant changes to accommodate it. This news can bring abrupt situations into the picture which may influence the social structure and determine how governments mold the policies for economic and overall stability.
News of a hurricane will indirectly affect the economy since it affects the people who are responsible for the same. Correspondingly, the sudden rise in popularity and relative price of Bitcoins determine the rate of currency exchange.
A country holding the maximum number of Bitcoins specialists will surely escalate into a position to define the world economy even by a smaller degree. Forex news trading strategy talks about certain trading policies that may arise due to some favorable/adverse economic news or occurrences.
Britain’s exit from the Eurozone will bring about a change in exchange rates with Pound in common. The Eurozone takes certain measures to keep price of Euro in position. Thus Britain suffers an adverse setback which is detrimental to its currency health. Whether this theory will hold 2 years ahead is still questionable.
Due to the rapid change in demand and supply for currency, its relative price fluctuates as well. A positive balance of payment account might help keep the imports in check which means greater attention to improving the indigenous sectors thereby strengthening less on imports.
Three reasons why Forex news trading strategy is essential:
Forex traders should have a pretty decent knowledge on exchange rates and its determinants. One of the reasons why they should stick to the best Forex news trading strategy is that it throws light on elements affecting the exchange rate. Three reasons why traders should understand the working of exchange rates and how recent developments shape them:
Government expenditures and taxation policies affect how exchange rates will be priced at regarding other currencies. Traders dealing with EUR/USD particularly feel the need to adhere to current policies due to random changes in these two country’s economic policies. This might include imposing tariffs and quotas for certain commodities/currencies.
The labour market is hugely responsible for determining how exchange rates will change their relative prices. Changes in minimum wages, post-retirement benefits, etc. might bring about changes in relative currency prices since labor policies depend on the country’s economic stability and historical reasons.
A general rise in price is inflation, and it fluctuates rapidly in response to production costs, supply costs, cost of hiring logistics and delivery services, etc. Whether the relative value of the currency according to a base year has risen/fallen determines the policy measures undertaken by government. Someone trading with a highly fluctuating currency may choose to trade on shorter spans or shift to less risky pairs.
Is News trading strategies in forex the best way to trade on shorter spans?
Forex brokers these days give specula importance on usage of news and understanding their contribution to currency trading. Some even tabulate the causative factors with their approximate percentage contribution. Traders believe that the best way to deal with such currencies is to incorporate central bank’s measures on response to changes in macroeconomic variables like unemployment and inflation. Pave the path for a brighter trading career with Forex news trading strategy.
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.