Forex news is one of the terms you hear when you start trading in the forex market. You are seriously interested in training in technical analysis of indicators and trading curves.
We encourage this interest very much and the continuation of learning everything new in anything related to it, but this does not mean dispensing with interest in other primary and powerful influences in their impact on the market movement.
Among the most important of these factors is forex news or economic or political news that can significantly impact the market.
Forex news is sometimes called “fundamental analysis.” And when a novice practices real trading on his account in the forex market, he will face significant changes due to the news aspect we are talking about and begin to appreciate its importance.
It is essential for a new trader to realize that ignoring the importance of one of the two analyzes and being content with only one of them is wrong behavior, and its result appears in the failure to estimate the correct trading and, therefore, a wrong decision that often leads to loss. Both technical and news analysis complement each other in estimating a sound position.
The most critical major forex news
As for the main forex news that we consider essential and worth paying attention to, focusing on and exploiting in currency trading and trading, it is the inflation news issued by the US government, all the news of the US Federal Reserve and central banks in great countries such as Japan, England, and the European Central Bank.
In addition to the news of major natural disasters, wars, significant political tensions, and news and developments in the stock and bond markets, the “global stock exchanges.”
Among the most important news are the reports of the European Union and the European Commission and reports of the economic performance of European countries, the United States, Japan, and Australia. And reports of trade exchange and major commercial crises, and it is also imperative to follow up on reports of the unemployment rate, interest rates, and new job data.
Other important forex news
Gross Domestic Product, which expresses the gross domestic product, is one of the most important indicators for measuring the health of a country’s economy.
Where central banks forecast growth each year, which determines the speed of growth as measured by GDP. When the GDP falls below expectations, the currency depreciates, while the currency appreciates if the GDP exceeds expectations.
As such, currency traders closely monitor this release and use it to predict central bank movements cautiously.
The Consumer Price Index is the most widely used measure of inflation. This indicator gives information on the average prices consumers pay for a basket of goods in the market and highlights whether these goods cost consumers more or less.
Central banks monitor this issuance. Central banks will raise interest rates to counter inflation if inflation is expected to occur and exceed a specific target.
Employment Index: The unemployment rate in a country is essential to the markets as it is used as an indicator of the economy’s health by central banks. A higher employment rate leads to higher interest rates to balance inflation and growth.
Other labor statistics, the US Private Employment Index and the Non-Farm Payrolls are released monthly.
Cons of trading based on forex news
On the other hand, some drawbacks exist in the case of trading in the forex market depending on forex news only, and even if we use it in addition to technical analysis, it still has a negative side.
Among these negatives, for example, is that some brokers, whether individuals or trading companies, increase their spread during market fluctuations that follow any news, which may affect the trades you make. Another drawback of relying on news analysis is exposure in many cases to what we call slippage, where a rapid and sharp move occurs in the market index, you are determined to place an order, and you find the market heading to a completely different price quickly.
One of the disadvantages of trading on forex news is the state of swing that it sometimes causes in the market, so you find the price swinging up and down before settling in one direction.
However, this case may carry significant gains simultaneously for those who scrutinize their accounts as much as possible.
How to benefit from forex news
As we talked about the negatives of forex news, we must point out that forex news has many advantages that can be taken advantage of, as with the announcement of forex news, prices move strongly, which helps every trader to achieve a good number of profit points if he can determine who has control over the directional movement
You must also adhere to capital management and its proper steps when trading forex news to avoid being negatively affected by violent and sudden price movements.
Place an order to take profits in a suitable place to take advantage of the maximum price movements that may occur in the markets. And make sure that the news does not happen to harm traders, as some promote it intentionally, but we as traders must learn and acquire the skill of trading at the time of news in the forex market.