What News Events Should You Trade Forex On?

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Video Transcription:

Hello traders. Welcome to the news trading course. And the first module, The Economic Calender. In this lesson we’re going to learn what events to focus on. And the reason we have to go through this lesson is because there’s so many data coming out of the wires every single day, and every single week that we need to filter out the good news to trade. Because not all of the data coming out is going to move the markets the way we want it to move them. Not all the news are calenderized on the economy calender are going to be profitable to trade. So I’m going to teach you which events you are going to be focusing on.

What News Events to Focus on

Now, the first thing you need to remember is that we are going to focus on high and medium impact events. And first of all we need to focus only on high end from medium impact events. And the reason is that we are looking for volume coming in to move the market. And with low impact events, there’s not too many traders out there waiting for the release of the data. So there’s not too many traders that are going to be stepping in and buying or selling once the data comes out. So this means that there’s not going to be a lot of volatility. And when we are trading the news, we are looking for volatility.

Now, you will notice that minutes prior to the release, there is absolutely no volume because news traders are waiting for their release, and this is because when you trade in news you are [Inaudible 00:01:39]. This means that, and this is one of the most common mistakes new traders make and they go to the economic calender and they wait until one or two minutes before the actual release. And they focus on the exceptions. And let’s say that the expectation for the non-firm payrolls is negative. They are going to be buying the Euro or U.S. Dollar prior to the release. And you have to remember that the expectations are just, are numbers that analysts put out there. You have to wait for the actual release to trade the event. Because if you front run the event you have no control over, well you never have control over which way the market is going but if you front run the event, you have no control of your actual position.

Now, the most common news to trade are Central Bank decisions on the interest rates and any change on economic policies. This means that we are going to pay close attention to The FOMC, The Bank of England, The Bank of Australia, etc and the Bank of Japan. Because whenever we have a change in economic policies, this is going to move the markets. Further on this course I’m going to teach you how to read the news and how to know how the market is going to react to these changes. But for the time being I’m just going to enumerate the events that we have to focus on.

Then we also have job numbers and unemployment numbers. Remember that job numbers gives us an overall signal of economic health. Just, this is very logical. I mean if more jobs are created the unemployment numbers are going to decrease, thus we have a healthier economy and this means that the currency of this country is going to be appreciating.

And of course I’m going to teach you how to read these numbers and how to interpret this numbers later on this course. Another good event to focus on is the retail sales and consumer price indexes. Because they are indicators of consumer spending. The more people spend, the healthier the economy is. Of course there is also the indicator of better salaries. If the consumer price index or the retail sales are coming up. Okay? But again I’m going to show you how to read and interpret these numbers later on this course and how to trade these actual numbers.

And of course the gross domestic product which is the value of the finished goods and services produced within a country. And the better the GDP the healthier the economy is because the more products they are, or this country is producing and the more services of course, and the more products and the more services that country is producing, the more jobs this country is creating, and the more job the country is creating the better the salaries, the better the spending etc. So as you can see everything is joined together.

So what we’re going to do now is, I mean we’re going to jump right very rapidly into the economic calender just to set our filters and to look at the news.

All right, this is, first factor is, economic calender and as you know here we have the filters and we are only going to concern ourselves with the high and medium impact events. We’re going to apply the filter, and as you can see we only have now in our hands medium to high impact events. And as you can see, well this is last week’s news. And as you can see we do have a lot of, even like filtering out the low to non-impact event news, we have a lot going on and there is a lot to be traded week after week. So for the time being this is the news we have to be focusing on. And the better you get at trading the news, the better you’re going to get at understanding what all of these releases mean. And of course the better you’re going to get at trading them all.

For example, if you’re going to start trading the retail sales or the GDP numbers, you might want to also trade the trade balance. The balance between the import and the export. And if you understand GDP and you understand that if a country is importing more that what it is exporting the trade balance is going to be negative thus this is going to be bad for the Australian dollar in this case and so on.

So, later on this course I’m going to teach you how to actually understand this data, and how this data affects each country and it’s currency and how it affects each currency pair. But now on the next lesson we are going to focus on what currency pairs we are going to trade during these high impact events.


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Adam is an experienced financial trader who writes about Forex trading, binary options, technical analysis and more.

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