It is common for new traders to completely forego the use of forex news items to assess the market simply because they find it too difficult. In addition to this, new traders also avoid news items about currencies because many mentors and trainers advise them to just focus on technical analysis because they believe that it discounts all events pertaining to the forex market.
However, forex trading is best done by combining both forex news leads and technical analysis signals. Even so, one thing that cannot be denied is that placing trades on the basis of which news items are out and their interpretation requires considerable amount of experience. Still, it is possible. Here are some tips.
Be Right About Both Currencies
One of the reasons why new traders are unable to use forex news items to profit even though they have the right lead is that they are only focusing on one currency instead of the currency pair. Since currency pairs are what you are trading in, you have to use news items about both the currencies in the pair to figure out the future movement of the pair.
Avoid Running After Small Trades
If you are planning to use forex news items to trade in the forex market then forget about small targets and expand your financial horizons to aim for the sky. When relevant news items are released, the volatility in the market increases exponentially.
This means if movements are taking place then they will be big movements. Therefore, when you aim for small change, you are doing yourself and the news item a disservice.
Agree With The Market, Do Not Counter It
If you follow the simple logic of the market being always right then you would never feel compelled to go against established trends and thinking that you know better than the market.
This is a cardinal sin because there are so many factors and forex news items that influence the forex market that it can be impossible for you to keep track of them all. You should, instead, just focus on the major ones and try to ride established trends for profits.
Do Not Overcomplicate Trading
The moment you start taking media outlets and publishing houses as authorities on forex news items, you will start incurring losses. The purpose of media news is simply to inform the common masses but you are not part of that group. You should avoid common forex news items, go to the source of the reports, and analyse them yourself.
Look For Volatile Times Particularly
The basis of using forex news items to trade in the market is that their release increases the volatility in the market. Volatility is good for profits. Therefore, if you avoid peak times such as just before and after news releases then you are letting go of the most potent opportunities in favour of less useful ones. A lot of money changes hands when forex news items are released and you should make sure that you are part of that exchange.
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