If you’re a keen follower of Forex or you like to dabble in trading, it’s important to keep your finger on the pulse. Major changes often happen because of an unexpected news event or because expectations of certain news events are not met. You’ll often find that Forex traders use news volatility to make a profit and in this article, we’re going to explore some of the ways you could take advantage of this strategy in your own trading experience.
Types of volatility producing news
Traders often trade the news because of its ability to increase volatility in the short term. In trading, as you’re wanting to make money and increase your portfolio, you’re likely to be looking towards the trade news that has the best market-moving potential.
Generally speaking, the news that tends to drive prices and produce volatility usually involves changes in central bank policy, shifts in government policy, unexpected results from economic data releases and big world events, such as the recent pandemic. You’ll also find that interest rate decisions and GDP numbers also have an impact on trading news for certain currencies.
Why you should keep an eye on US news
While you’ll want to keep an eye on trading news events across multiple countries, you’ll want to pay special attention to the news over in the US. This is because it’s still considered to be the world’s most powerful country and if often described as a financial superpower. With the largest economy in the world, the US dollar is not likely to be matched in terms of superiority any time soon!
Things affecting the trading news there include wars, natural disasters, political unrest, protests and elections. While they might not have as big of an impact as other things, it’s definitely worth keeping a close eye on them.
Choosing currency pairs according to the news
Currency pairs are one of the most popular trading methods when it comes to Forex. Whether you have a Forex welcome bonus account from an online trading platform or operate in a different way, you’ll want to take advantage of the short-term spike in volatility that comes with trading according to the news.
It’s important to remember that because the news can increase volatility in the market, trading currencies that are deeply liquid is vital. This ensures that your Forex orders happen smoothly without any mishaps or hiccups.
Don’t forget, trading on any market comes with its own set of risks, but also rewards. With these tips around trading according to the news, you’ll be able to keep an eye out for new opportunities that will hopefully be lucrative in the short and long term.