Most financial markets are affected by news announcements. This applies to the forex market too as forex news affects the short term trends in the market. Most traders should be aware of the effect of different newsworthy events on their trading. You need to keep up to date with the major news announcements and when they occur.
In this financial market, you are able to trade any global currency. There are eight major currencies which are the most volatile as well as the most liquid. Stemming from these eight currencies, there are 17 derivative currency pairs that you have a choice of to trade. Most new traders are advised to focus on the major currency pairs as this is where many of the experienced traders make most of their income.
Once you have decided on the currency pairs you intend trading, you should also become aware of any forex news that affects those pairs. News releases that affect certain currency pairs are published every day. The fact that this market operates 24 hours daily makes it easy to you to use these news releases to your best advantage. The importance of the releases should be monitored as the publications are not all important, particularly if you are only trading a couple of currency pairs.
You need to keep an eye on when the news relevant to your currency pairs is due to be released. To do this efficiently, it is best for you to maintain a forex calendar. This calendar will advise you of the time, date and place of global news releases. Your forex broker may supply you with a suitable forex calendar. If not, it is possible to obtain a free version from several websites.
Sorting Through the News
Certain news announcements carry more importance than others. Many of these are published monthly and they are normally the major indicators. These news releases are generally related to the economic health of a specific country. You will have to make the decision as to what news release is more important than another. This will vary from one month to the next. You may find that the employment levels information is important this month, but will not be next month. The relevance of the information is dependent upon the general economic state globally and of that specific country.
Forex News Timeframes
The effect of the news releases varies. It is dependent upon the importance of the news and the market conditions at the time. The market may be affected for only a few hours after the news has been released, or it may be affected for several days. This is dependent upon the impact of the news. The effect of these news events is generally felt soon after the release.
Trading Forex News
Simply knowing about the news releases has no bearing on your trading. You have to know what to do with the information at hand. Currency pairs that are affected by news releases will often move quite drastically immediately after the release. This is often a panic movement and it is advisable for you to avoid trading for at least 30 minutes after an important news release. The market generally settles down after that and you will then be able to get a clear picture of the impact of the news. You should bear this in mind because the excitement in the market could force you to trade impulsively.