Currency prices in the forex market are heavily influenced by economic and political events going around in the world. They are often very useful for day traders as their effects are immediate and sometimes sudden. The forex community has mixed responses regarding the benefits of news-based trading however even if many traders do not use this strategy it does not mean that the market does not change based on major world news and data releases. It is important to know why news-based trading is important in forex by all aspiring traders in order to have multiple trading strategies as their weapon which will help them in making better judgment calls.
Developing news-based trading strategies is not that easy and requires time and dedication to understand how news impacts the forex market. There are multiple reports, releases, happenings, and news, being shared at the same time, you need to decide which ones are useful for you, meaning the ones which might impact the prices of your chosen currency pair or multiple pairs if you have a diverse portfolio. The most important news is related to the economy which includes:
- The GDP reports,
- The analytical reports on the economic situation of the country,
- The incoming data on the trade balance,
- The unemployment rate in the country,
- The changes regarding monetary policy of the state,
- The monetary policy of central banks. Central banks play a huge role in dictating the direction of the forex market.
- The financial markets that are related to the Forex market.
Apart from all those economic news, many forex brokers provide forex trading analysis and an economic calendar that includes all the upcoming major events. Following this calendar can make traders better prepare for what is about to come and plan ahead of the time in which direction to go for a trade. You can also check the blog, the secrets of copy trading to enhance the chances of a successful trade?
Everything which might help a trader in making a better trade and end up with profits should be taken advantage of, in this case that is news-based trading strategies. They often provide huge profitable income and are mostly short term so they are more suitable for day traders who can leave once their targets are met.