News trading

This strategy is used specifically to trade based on news that can affect corresponding currency pair. The beauty of this strategy is that it minimizes risks by inclusion of stop loss limits. However, it is not to be any kind of news. Its best used with those news releases that have a high impact. You can learn the impact of news by looking at forexbite.com economic calendar. It covers all the major currencies and their respective economies. Since the US Dollar is the most wide exchanged currency, USD based pairs show better results.

Steps: 1. Choose an important news release that has an effect on the forex pairs. 2. For EUR/USD, the following are good fundamental indicators: U.S. GDP, U.S. nonfarm payrolls, U.S. interest rate decisions, EU zone interest rate decisions and U.S. budget deficit reports. 3. Enter both Long and Short positions approximately 20 minutes before the releases 4. Set Stop-loss for the both the long and short positions at 15 pips from the resistance and support levels. 5. You can cash-in by watching for the trade swing to happen at your forex software terminal or set a Take-profit for both positions at least to 2 or 3 times the stop loss levels depending on your risk appetite. 6. Cancel the un-triggered order(s) after the news is released.

The forex trading markets are always bound to short-term fluctuations brought on by the release of economic news. In order to be successful at trading news it s important to keep in mind which releases are expected when, which ones are most important given current economic conditions. Numerous alternatives are available for traders who want to capture a breakout in volatility without having to face the risk of a reversal. Be diligent and watch for top of economic news and you can reap the rewards.