4 Ways to Trade Based on Forex News

For Forex traders, the news reflects great benefit prospects. By news, we mean separate releases of economic results. Every major economy routinely reports facts and figures like GDP, inflation, unemployment rate, among others. During the duration of these launches, if you exchange Forex, you have the potential to make a profit.

We must caution you, though, that potentially high profits often come hand in hand with greater risks. At these times, volatility rises, and prices can move chaotically. It’s easier not to participate in any transaction if you don’t have a good trading strategy for a specific case. 

Here are some techniques that you can use in Forex or CFDs.

Directional Bias

Using a directional bias suggests that after the news article is published, you expect the market situation to shift in a particular course. 

It is useful to know what news stories are about when searching for a trading advantage in a specific direction, which will trigger the market to shift.

Non-directional bias

The non-directional bias technique is a more prevalent news-trading tactic. This strategy lacks a directional bias and merely relies on the assumption that a large news story will produce a significant shift. 

Which way the forex market swings don’t make a difference. This suggests that you should have a strategy in place for approaching the trade whenever the market swings in any direction. You have no prejudice about whether the price would go high or low, thus the label of non-directional bias.

Actual number vs. Consensus

Some experts will predict what figures will be published many days or even weeks before a press story comes out. 

This figure will differ among various observers, but in common, there will be a closely related number that most of them settle on which is called consensus. The figure that is given is called the real number when a news article is published.

Buying the rumor and selling based on the news

This is a popular term used in the foreign exchange market or CFDs because it sometimes appears like the trend doesn’t reflect the forecast will lead you to think when a press report is published. 

The major market participants are not going to wait until the data is finally published with this intention to begin operating on a position. Before the exact amount is announced, they can go forward and begin trading off their dollars for other currencies. 

However, you see that the stocks are not necessarily going in the direction you thought they would when you head to your site to begin selling the currency. Currently, it’s going up. Before the news story even came out, the major players had already changed their positions and can now take income after the period of the news. 

Because of the consensus, the business participants believed the unemployment rate would increase, but eventually, the press release showed that the figure ultimately plummeted, indicating support for the currency.

A massive dollar rally around the board would be what you’d see on the maps, and the major market leaders didn’t want this to happen. 

Now that the research is out and suggests anything entirely different from what they thought, they are all attempting to change their positions as quickly as possible.