Trading news release is a common practice among traders and the most challenging strategy at hand.
When it comes to news releases, you will never know how the market will react towards the news release. it is hard to predict the forex market,more to that trader’s sentiment.
The moment you catch one trade, you will swear never to miss any news. However, if you trade it randomly, you may never want to hear any talk about it. You directly face its wrath.
The economic data acts as a catalysts for short-term movements in the forex market.
News release from the U.S. economy is the most volatile in the forex market. but it is also important to always look at news release from other major economies that make up the forex market.
When trading news release
When trading news, you should know which releases are actually expected. Make it part of your pre-trading routine and the first thing to do before you start trading. Secondly, know which data is important.
Trading news is harder than it may sound. Not only is the reported actual figure important, but also the traders’ response in the market.
Also, some releases are more important than others. It is measured in terms of both the significance of the country releasing the data. It also depends on the importance of the release in relation to the other pieces of data released at the same time.
For example news release from the US economy is more significant to the forex market compared to other economies. This is because the U.S. has the largest economy in the world. More to that the U.S. Dollar is the world’s reserve currency.
Also when unemployment rate is released with retail sales, unemployment rate is more important in relation to retail sales.
Therefore if you choose to trade news, look at which economic news is released. Take note of when, which releases are most relevant to forex traders and how traders are reacting towards the news release.
What news events are most volatile?
The major fundamental factors that influence the forex/currency market are classified as social factors, macro- economic factors, political and environmental factors.
The fundamental figures are released every day as scheduled on the economic calendar. The economic calendar shows the region,forecast and actual data in relation to the level of importance to the forex market.
Every trader is interested in the kind of news that brings high volatility to the market. So let’s now look at the most important economic releases for any country:
The most volatile new release include;
- Interest rate decision
- Non -Farm Payroll(NFP)
- Unemployment rate
- Gross Domestic Product(GDP)
- Retail sales
- Inflation (consumer price or producer price)
- Manufacturing(Purchasing Managers Index( PMI))
The relative importance of these releases change depending on the current state of the economy.
For example, unemployment may be more important this month than GDP or interest rate decisions and less important next month.
Therefore, it is important to follow up on what the market is focusing on at the moment.
I will further discuss this in the next article, and we shall see the most volatile news data you should focus on to trade.