Forex News

Learn Forex News

Learn Forex News, Or Else Learn to Lose Money

Learn Forex News, Or Else Learn to Lose Money

The forex markets are the most technically-inclined of all financial markets. In fact, many foreign currency traders do not pay much attention to forex news, instead choosing to rely almost exclusively on "the technicals" (charts, mostly) when making buy and sell decisions.

While a technicals-heavy approach to foreign currency trading may be wise, forex traders should absolutely take some time to learn forex news.

Even if you only learn about forex news so as to know when to get out of the market during the periods of great volatility that commonly accompany certain news announcements, it is not a smart idea to bury your head in charts so thoroughly that you forget about news events entirely.

Here are three major learn forex news topics that must be a part of your forex trading strategy:

1. Important People Talking About Interest Rates

The piece of forex news that most directly, most powerfully affects currency values is interest rates. The interest rates applicable to a particular country's currency, in turn, are affected by the interest rate policies of the central bank of that country.
Therefore, when the Chairman of the Federal Reserve speaks about interest rates, the forex world listens with bated breath.

Generally speaking, higher interest rates result in currency appreciation, whereas lower interest rates result in currency depreciation.

Notably, though, the forex news that is most vital to your success as a forex trader is not interest rate changes, but expectations of and rumors concerning interest rate changes.

This is true simply because by the time a central banker actually announces a change to interest rate policy, the forex markets have already factored in the news. As you either already know or will shortly learn, the FX markets process news and information at an astoundingly rapid pace.

The forex news you really need to learn, then, with respect to interest rates, is what important people are saying when they are talking about interest rates.

Your important people roster should include:
-- Central bankers
-- Influential Forex news websites (Bloomberg.com, MarketWatch.com, Reuters.com, Daily FX)
-- "The Consensus Expectations"

If you don't know what central bankers, forex news websites, and "the consensus" are saying about interest rates, you are putting yourself at a disadvantage in the forex markets.

Hook up to sources of forex news that give you access to that information. Listen to what people are saying. Check out the opinions of respected analysts at sites like fx360. Not to say you should always believe everything you hear, but listening is good.

2. U.S. Economic Reports and What They Say About Growth

Second to interest rate expectations but still worth watching for are economic reports from the individual countries whose currencies you are evaluating. In particular, you need to watch for signs of inflation, as indicated by "too strong" economic growth reports.

Because currency trading involving the U.S. dollar account for approximately 85 percent of all forex trading, U.S. economic reports are typically the major market movers.
Important U.S. reports to watch include:
-- Unemployment claims
-- Retail sales
-- Existing home sales
-- Inflation
-- Gross Domestic Product (GDP)
-- Consumer Confidence Index

Your overall goal as a forex trader, when evaluating these individual economic reports, should be to identify the impact these reports may have on the all-important interest rate expectations game. If an economy is growing "too fast," an interest rate hike becomes much more likely.

Which then makes a hike in the price of that currency much more likely.

3. When Forex News Hits the Wires, Consider Not Being Around

There are some currency traders who make good money trading forex news.
However, "trading the news" is an extremely treacherous forex trading strategy. Prudence requires, then, that we urge you to consider not being in the forex markets when forex news hits the wires. Or at least consider thinning out your positions until the forex news blows over.

If you do choose to be in the forex markets when news is happening, you need to be prepared for some serious volatility. You need to be prepared to risk losing money, maybe a lot of it, in a very short period of time. The forex markets can swing wildly when forex news hits.

If risking heavy losses is not your thing, use a forex news calendar to see when forex news is scheduled to come out, and then arrange to be out of the markets during those hours.

Especially if you are a currency trading beginner, learning to get out of Dodge in anticipation of forex news may be the most important forex news you hear all day.
Consider, though, watching the market action during these periods, even if you do not have any trades on at the moment. Currency trading before, during, and after big FX-related news announcements is capitalism in its purest form, a sight to behold.

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