The rookie traders don’t really understand the importance of the news. They keep on trading the market without doing the proper research and messes things up. On the contrary, the elite traders always assess the news factors and try to find reliable trade signals favoring the trend. But do we really need to assess the news factors to make a consistent profit?
In short, the answer is YES. Without knowing about the fundamental factors of the market, you will never find the actual direction of the trend. You will keep on guessing and thus lose money most of the time.
So, how does the news affect our trading performance? To know this answer, you should be reading this article as we will discuss the impact of major news in the retail trading profession.
So, without any delay, let’s get into the details.
Change in trend
Everyone loves to trade with the major trend. The novice traders always think that trend trading strategy is the most effective way to make money and they blindly stick to this method. Even after the change in the trend, they forget to do the proper data analysis and loses a significant portion of the capital.
But if you learn to analyze the news factor, you can easily determine the change in the trend. For instance, FOMC meeting minutes or NFP can easily alter the strength of the U.S dollar in the global economy. So, if you manage to understand these news factors, it won’t be a big deal to predict the direction of the trend based on the news data.
Spikes in the market
Those who are trading the market in the lower time frame have to deal with many false spikes. At times the novice traders often become confused by experiencing heavy slippage in the market. Spikes are very common but can avoid heavy slippage by using the premium Saxo fx broker UAE.
Once you start to take the trades with the advanced broker, you will be able to trade the major news without having any major slippage. Now let’s come to the spikes in the market. During the news release, you should not be trading the market with tight stops.
If you do so, you are going to lose money most of the time and there is nothing you can do about it. So, to protect your trading capital, you should focus on the long-term goals and trade this market right after the news release.
The major breakout in the Forex market takes place right after the news release. Unless you have a good idea about the economic news calendar, you will never understand the proper way to find the breakout patterns in the market.
It might take some time to learn the proper use of the economic calendar but if you devote yourself, within a month, you will get used to it. Based on the economic news release hours, you should be designing your trades in the market. At times you might become confused about this market but this is absolutely normal.
Stop taking the trades without assessing the news data and try to find the reliable trade signals which favor the news. If possible, you may use the demo account to learn the process of breakout trading after the news release.
Optimize your risk factor
Those who have strong fundamental analysis skills never take high risks in the market. They are well aware of the fact that the market is unpredictable. Based on the severity of the news they always optimize their risk as it allows them to make a decent profit without having much trouble.
You might be thinking that managing the risk exposure based on news hours is not that profitable. But once you learn this technique, you should be able to make significant progress and thus the profit factor will also rise. So, try to integrate your risk management technique with the news calendar to earn more money.