Currency trading news. The catalyst of the foreign exchange markets.
Currency trading news are the catalyst of the foreign exchange markets. Forex market news are the triggers of trends that can last several days. Make sure to keep and eye on forex news.
Some currency trading systems wait only for key currency trading news to enter into "play mode". These systems are based on breakout trades.
As a result, it is important for any type of trader to know what the most important economic releases are for the U.S. dollar and also for the most important markets in Europe.
Since 90 percent of all currency trades are against the U.S. dollar, the currency movements are naturally most sensitive to U.S. economic releases.
Normally the most significant moves on the currency pairs occur during the first 20 minutes of the economic release. I do not like to be in the market when this releases occur.
Nonetheless breakout trades are the most profitable when currency trading news occur. These breakout system are just any move outside the range that any kind of currency pair develops prior to the currency trading news.
TOP MARKET MOVING CURRENCY TRADING NEWS
|FIRST 20 MINUTES||DAILY|
|Unemployment (nonfarm payrolls)||Unemployment (nonfarm payrolls)|
|Interest rates (Federal Open Market Committee rate decisions)||Interest rates (FOMC rate derisions)|
|Trade balance||Foreign purchases of U.S. Treasuries (TIC data)|
|Inflation (consumer price index)||Trade balance|
|Retail sales||Current account|
|Gross domestic product||Durable goods|
|Current account||Retail sales|
****For more information and description on forex market news click here*****
Examining the difference in the range of pips that forex currency pairs do in the first 20 minutes of currency trading news releases and, on a daily basis, is also important to estimate how many pips you can get from a breakout currency trading system. The following table examines and example for the EUR/USD.
|FIRST 20 MINUTES||AVERAGE RANGE (PIPS)||TOTAL DAILY RANGE||AVERAGE RANGE (PIPS)|
|Nonfarm Payrolls||124||Nonfarm Payrolls||193|
|FOMC Decisions||74||FOMC Decisions||140|
|Trade Balance||64||Foreign purchases of U.S. Treasuries (TIC data)||132|
|Inflation (CPI)||44||Trade Balance||129|
|Retail Sales||43||Current Account||127|
|Current Account||43||Retail Sales||125|
|Durable Goods||39||Inflation (CPI)||123|
|Foreign purchases of U.S. Treasuries (TIC data)||33||GDP||110|
One important thing to check here is that contrary to popular belief, the GDP (growth domestic products) report has become one of the less important economic indicators on the U.S. calendar and has led to one of the smallest relative movements in the EUR/USD.
One possible explanation is that GDP reports are less frequently released than other data, but in general the GDP data is more prone to ambiguity and misinterpretation.
For example, surging GDP brought about by rising exports will be positive for the home currency; however, if GDP growth is a result of inventory buildup, the effect on the currency may actually be negative. Also, a large number of the components that comprise the GDP report are known in advance of the release.
How can you use currency trading news to your own benefit?
For breakout trades done VERY CAREFULLY…Draw a horizontal channel (upper and lower Support and Resistance level) where the currency pairs has been fluctuating prior to the forex market news. Set buy orders above and sell orders below the channel, enter once the market break at either level.
NOTE: THIS MUST BE DONE VERY CAREFULLY ANALYZING CONTEXT from market participants.
The knowledge of which data has the potential of leading to the largest average range can be useful in determining how to open positions.Overall knowing what economic indicator moves the market the most is very important for all traders. Knowing the 20-minute versus daily range is also very important because the exchange rate adjustment to economic news appears to be very swill.
Any reaction beyond a 15-to-30-minute window after the data is released may be the result of investor overreaction or trading related to customer flow rather than news alone.
The GDP is a perfect example, the 20-minute reaction ranking (pips) is higher than the daily ranking. It is also important to be aware of which data the market deems important at any point in time because the market's focus changes from period to period; once-relevant data may end up having less of an effect on currency values later on, and vice versa.
So keep that in mind when trading currency trading news my friend.
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