You have probably also noticed that just knowing technical analysis and price action is not enough when trading. It is equally important to know what drives the market. There are trend lines, two-valley or two-valley pattern, Soroshaneh pattern, the main force behind these movements in the market. This force is the same as Forex news! To understand the importance of news, imagine this scenario.
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Understand the importance of Forex economic news
Suppose there is a report in the evening news that the largest software company you were dealing with has gone bankrupt. What is the first thing you do? What changes your mentality from this company? What do you think will change the mentality of other people from this company?
The obvious reaction is to sell your stock immediately. In fact, this is something that probably all the shareholders of that company do. The fact is that the news affects our mentality and action in decision making. The same is true of currency trading. However, there is a clear difference between how news is managed in the stock market and the forex market.
Let’s go back to the example above and imagine that you heard the same bankruptcy report of a large software company but the day before it was published in the news. Naturally, you can sell all your stocks, and as a result of hearing this news the day before, you can make more money than anyone else who has heard it on the evening news.
is it OK for you? Unfortunately, this little trick is called a cowardly deal and you will be imprisoned. Martha Stewart did just that, and now she’s the cover photo for the magazine. In the stock market, when you hear rent news in advance, it is illegal, but in the Forex market, it is called a fair game!
The sooner you hear or see the Forex news, the better the deal is for you and there is no penalty for you. Add some technology and instant communication power to it, and what you have is the latest and greatest Forex news.
This news is a great tool for retailers because it allows them to react relatively quickly to Forex economic news. Big traders, small traders, big traders or lean traders all have to depend on the same news to make the market move because if there was no news, the market would move by force! Economic news is important for the Forex market because it moves it. Regardless of technical matters or price action, fuel news is the engine of the market!
Why trade Forex News?
The answer to this question is very simple: make more money! As we learned above, Forex news is a very important part of the market because it has the potential to move the market. When it comes to Forex economic news, especially the important news that everyone is following, you can almost expect to see a big move. Your goal as a trader is to move in the right direction. The fact that you know where the market is most likely to go creates an opportunity worth exploring.
Risks of Forex Trading
As with any trading strategy, there are always risks to be aware of. Some of these risks include: Because the market is highly volatile during major news events, many brokers expand their trading spreads during these times, which increases transaction costs.
You can also experience price fluctuations. Price fluctuations occur when you want to enter the market at a certain price, but due to the extreme fluctuations during the publication of Forex economic news, it would reach a very different price.
The big market movements created by news events are often not in the same direction. Often the market may start moving in one direction only to return in the other. Trying to find the right path can sometimes cause headaches!
Although trading Forex news can be lucrative, it is not easy and requires a lot of practice. Most importantly, you should always have a plan. In the following articles, we will provide tips on how to trade Forex news.
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