Currency trading is heavily dependent on International News events since it trades the money of different states. Often one fails to keep the right track of worldly developments on a weekly basis; this might result in them facing serious damages due to unexpected market volatility. To keep this in check, one must follow a strict Forex news trading system and maximize profits with minimum losses.
In such a pursuit, traders can check out calendar tools online; this will help them determine how Forex news trading systems work. These tools list news pieces that will affect currency pairs on a weekly basis.
Here's an easy example: Suppose a trader is looking to trade EUR-USD pair and a certain financial event happened it Europe, like Brexit; this would leave an impact on the value of the Euro in respect to the Dollar. Traders who can predict these movements can earn a huge deal by riding on the wave depending on their correct assumptions of the foreign exchange market.
Take a brief look at the different kinds of Forex system news that are likely to leave a trace on the market.
- Unemployment Reports
Social reports like unemployment create a significant trail in the Forex market. If unemployment rates in the United States are rising, more traders will likely sell their USD stakes, and this will eventually lead to a price drop of the dollar.
If a trader follows the employment trend of the country on any news portal, s/he can easily make an educated guess of its effect on the market.
- Interest Rates
One of the primary events of any Forex news trading system is the interest rate factor. Traders look to buy currency variants that offer higher interest rates because of the lucrative returns.
However, interest rates are not a sure indicator of better returns. Often central banks of countries slacking economically increase interest rates to earn more revenue or discourage people from taking loans.
Another reason where interest rate based trading can falter is currency fluctuation. With sudden price drops, this phenomenon can neutralize the benefits that traders expect from a high interest rate currency.
- GDP News
Gross Domestic Product is the unit to measure any country’s economic development. If you look at it logically, it is bound to disturb the foreign exchange market. In case of most Forex news trading systems, a country’s growing GDP is sought after by traders because they want to ride the growth into making profits. Some pro traders already have an effective assumption of a nation’s GDP outcome and buy and sell Forex securities to make profits with announcement volatility.
- International Trade
Impactful Forex system news like new international trade events like WTO summit, APEC summit, etc. affect the currency exchange market with their resolutions. Many traders keep track of the daily developments happening during these summits to stay ahead of the market.
There are many other events which come under a Forex news trading system because of their likelihood to affect the market. Announcements like treasury budget, consumer price index, producer price index, inflation reports, and other resourceful declarations create a similar impact.
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.