Forex News Trading – Trade the Forex News For Big Pips

Written by admin on April 14th, 2011

If you could foretell the pairs would be at the close, you could probably make a few pips from your trade. Doubtless a lot more than a few. Anyone gifted with the capability to foresee the future would almost certainly make a fairly decent living as a forex trader!

Thing is, the skill to foresee the future isn’t in my super-hero powers, so I make use of more down-to-earth methods to catch trends. One of the largest weapons I have in my forex trading arsenal is a solid awareness of the value of trading the news.

There is a lot of argument about which is the best trading strategy to use. Most opt for news trading versus technical analysis. Some “traders” even opt for hurling darts at a board. I’ll listen to most theories but I kind of like having money in my trading accounts so I’m not 100% sold on the darts scheme.

For me, trading the news is what creates the most consistent profits. Latching on to a breaking news item early on, has lead me on some of the most profitable waves in my currency trading career. Sure, some didn’t go exactly to plan, but overall, news trading has been how I paid my bills for many years.

Proponents of technical analysis would insist that breaking news isn’t first hand information and not accurate enough to be profitable. My response? Bull. Forex News creates mass movements in both directions and catching a trend early is as good a way to almost guarantee gains as anything I know of.

Quick example just to illustrate this. The Central Bank of Somewhere Land sees their currency as being overpriced. An over valued currency makes exports less competitive, reducing demand for goods , ultimately leading to a reduction in manufacturing output. No point manufacturing goods nobody wants to buy is there? Declining output means lay-offs, increased welfare costs and reduced consumer spending. Not exactly the best scenario for the already struggling finances of Somewhere Land.

To counter the rise, the National Bank sells local currency on the markets. Lots of currency. Billions. Upshot? Your dollar (or Canadian Dollar or Yen) is suddenly worth a lot more of Somewhere Land’s currency.

Had you caught the trend, then you would be trading as near the peak as possible. You almost certainly won’t be in on it (unless you are on speaking terms with somebody within the Somewhere Land National Bank) so the next best option is to jump on the trend with the breaking news. The news breaks, you start trading.

As your trades are busy accumulating pips (profit for your account), the technical traders are busy staring at their charting software looking for the next big move. By the time their analysis catches the pattern, our positions as forex news traders are well into profit.

Picking a forex news broker isn’t only about applications, leverage or even spreads. Your broker might be great at all these all these, but if their news service isn’t up to scratch, you’ll miss a lot of very profitable trades.

All the big trading banks worldwide trade the forex news and they have specialized teams to do this. The realize that catching trends early leads to the maximum profits, so forex news trading features heavily in their overall trading strategies.

Quick question for you. Are you making enough profit that you can afford to ignore the potential from forex news trading? Take the next step in your career and learn to trade forex news. Your fx trading account will will benefit from the decision.

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