Daniel S. asked:


If you have been trading the currency market for a while, you’ll know that there is money to be made trading forex news. However, trading the news in forex does involve some risks and there are 5 major traps you must avoid before you can to trade the forex news successfully. We’ll discuss these 5 traps and provide some forex tips and forex trading strategies to use to counter these traps.

Trap #1: Strong Market Reaction.

Economic news releases and reports are forex indicators for future long-term movements for a currency pair. But for short-term trading, the actual results and the forecasted expectations may create big move opportunities.

Thus, when actual results came out the same as what the market expected, then there is high possibility that the market will not have a strong reaction. It is the big gap difference between the actual release and the market expectations that causes the market to have a breakout or big movement.

Trap #2: Generally Short-Lived.

Most of the time, breakout opportunities from the news release are not a long term trend as the movement may only last for few minutes to few hours. But still, it has to depend on the significance of the economic news release and the difference between the actual results and the forecasted expectations.

Most traders are either using forex scalping or day trading when they trade on news releases. One of the forex tips is to try not to trade during the release as the trade can turn against you in a short moment even after you caught a big initial move.

Trap #3: Quiet Market before a Big Movement.

The market may often poise for a huge movement when it is very quiet before some economic announcements or news releases. This is because the market is waiting for those before deciding on which direction it is going.

Traders are waiting for a right opportunity to jump into the market after the news reports are being released. Thus, you should not react to any forex trading signals 2 to 3 hours before the news are released as the signals may be false and misleading.

Trap #4: High Spread during News Releases.

During news releases, a trading broker may guarantee that your trade will be executed, but none of them will guarantee a normal spread for you. Forex brokers will widen the spread due to the lack of trading volume during the release. EUR/USD is one of the currency pairs with tight spread, but I have seen it turning it into a 10 pips spread from a normally 2 pips during a news release.

Trap #5: High slippage.

You might experience slippage when there is a big move during news releases. It means that your trade order will get filled at a different price instead of the price that you wanted. For example, you might have set a limit order at 1.3000.

But when the news release, the price shoot up 50 pips to 1.3050. So a slippage may occur and you will get your order filled at maybe 1.3020 instead of 1.3000. This is quite risky as the market may go against your trading plan.

The above forex trading guide will be very useful if you are using a forex day trading strategy to trade news. But in any case, I will not recommend news trading as it is very risky with the above considerations.



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Kelly Price asked:


The true value is about 80.00 a barrel.

Every time sentiment has pushed it up toward the psychological $100.00 we have sold it – look at our other articles. If you would sold on the last two pops to this level, you will have seen the decline is $20,000 based upon 1 contract.

Its only sentiment that drove prices up – greed and fear drove the market NOT Supply and demand.

A CURRENCY TRADE EXAMPLE

Now let’s look at a currency that is overbought and a huge profit to be made.

The euro against the dollar is the trade.

Regular readers again will know that 1.50 is the psychological number that traders want to target.

1.50 is too high just like $100 in crude is. This is simply sentiment driving prices near these levels and the euro will not trade above this level in our view.

The last time it got up we sold (see our other articles) and said it would target 1.46 it did and that’s a tidy 600 pips profit.

It’s up testing the highs again – but the bad news for the dollar is discounted in the price and its now only greed and fear driving the euro.

All the arguments you here for dollar weakness are discounted:

A 50 bps rate cut, a housing market in trouble, sluggish growth etc and there is no more bad news that’s not known.

Now throw into the equation that the euro zone has problems of its own (which traders seem not to bothered about) and you could see a break in the dollars favour.

How far?

We expect the dollar to trade back to 1.46 and if this level gives way target 1.40

The majority don’t agree with us (they didn’t in crude either) but we won’t let that bother us, were sticking with our euro short view to give us another thumping profit.

When looking for extreme bullish or bearish news to break a price always get confirmation of weakening momentum on your forex charts, so you are trading the reality and not getting in to soon.

Will Rogers once said:

“I only believe what I read in the papers”

He was joking but many traders simply take it as gospel when a news story says the dollar is going to fall into oblivion.

Hold your head, look at the facts and if prices gone too far to soon, get ready to trade against the losing herd.

Can you do the above?

Of course you can – it simply means standing back, examining the facts and then looking for trading signals on your forex charts.

This article was written at 8AM Eastern time 15th January



Baby Sleep Tonight

Lance Owen asked:


So you have been searching for some Forex trading techniques to help make you money in the forex market! The first thing you will need to do if you want to succeed, is to read all the Forex news and information you can get you hands on. Here is a good place to start http://www.greatforexspot.com  These are some key basic things you need to know if you want to get a clear understanding of the Forex market. Understand the basics of the market, how it works, and how to trade successfully.

Once you are familiar with the basics of trading Forex, it will then be time to learn some systems that have been used by various traders to trade in the forex market. As a beginner, it will seem like a daunting task, but it is not necessary to learn many systems. All you need to do, is to start off with a simple trading system and see if it will work for you. Remember, trading in Forex or Stock markets is like gambling. You must fully understand the risks involved but more particularly, only invest what you are prepared to lose. In other words if you can’t afford to lose the amount you wish to invest, DON’T invest. A lot of investers forget this 1 golden rule & when the market goes into a downward spiral as we have all just witnessed in very recent times, they then throw more money into it trying to do what we call a catch up. Trying to catch the losses. “I must recover my losses”. This is the worst thing to do. So what should one do in this instance? Simple. DON’T trade. Keep an eye on the market closely, but use restraint. If you don’t trust yourself to NOT trade then stay off the trade scene all together for a period of time. Readjust, do other important things in your life that you might have neglected. Then when you feel ready, approach the market again, but this time your focus & ability to see things in a new light will be evident & you can trade in a better sense.

As scary as the last paragraph sounded, it’s not all that frightfull. Trading in the good times to make the huge profits is what we all crave. But sometimes you must trade in bad times too & that is what trading in any market is all about. One must learn to adjust accordingly. These life skills are not taught, they are learned.

It would help by attending online tutorials on Forex trading techniques. There are many reputable forex websites out there that provide news, information and video tutorials for beginners. Such information and videos can provide all the necessary tools so you can develop a unique trading system.

Want to be successfull in the Forex market?

You may want to start learning here:

http://www.greatforexspot.com

There is a wealth of useful information, guides, books & software on forex trading :

http://www.greatforexspot.com/forex-store

 



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Kelly Price asked:


Enclosed you will find 6 common mistakes, made by the vast majority of forex traders -make anyone of them and you will join the vast majority who lose money, so here they are avoid them…

1. Trading Expert Opinion

All the forex news you see looks so convincing and today, we have TV channels and lots of resources on the net but there only opinions. They won’t help you win. If they did, more traders would win than they did 50 years ago and this is simply not the case – the ratio remains the same. Sure, the news sounds convincing but chances are its wrong, as it reflects the views of the majority who lose.

News is discounted instantly by the market and its how it is perceived that determines the course of events. It’s a fact that – most bear trends end when the fundamentals and news is at its most bearish and markets crash, when the news is at its most bullish.

2. Trading a Forex Robot with a Simulated Track Record

You can buy these online and they tell you that you can get rich for a few hundred bucks, you won 217;t be surprised to learn – you can’t. Most of these robots have great track records, the problem is there simulated over past data and won’t help you make money – there not worth the paper there written on, we can all be rich if we know what happened and could trade it!

Get the right forex education and learn a forex trading strategy yourself to lead you to success. Leave these cheap, losing robots, to dreamers and lazy traders.

3. Trying to Predict forex Prices In Advance

Prediction is another word for hoping or guessing and that won’t get you far in forex trading. You can’t predict forex prices in advance so don’t try. Act on the reality of price change and trade the truth.

Many gurus sell scientific systems that claim they have found the formula for market movement and all you need do is follow them. If however markets did move to a scientific theory, we would all know the price in advance and there would be no market. Prices move because markets are uncertain not certain!

4. Day Trading or Scalping

A fantastic way to lose money uickly – it doesn’t work and the reason is obvious:

It’s impossible to predict what millions of traders are going to do, in a few hours. Because of this, all volatility is random and you will lose – period.

Ever seen a day trading system on the net with a real time track record? Neither have I – But I have seen lots of simulated ones!

5. Placing Stops Within In Random Volatility

Another common mistake is placing stops where there almost guaranteed to get you stopped out, as there within random volatility. If you want to avoid this, make learning about standard deviation of price, part of your essential forex education.

forex trading is all about taking calculated risks at the right time and taking a risk. If you try to restrict risk to much, you actually create it and guarantee yourself to be stopped out.

6. Over Leveraging a Small Account

You can get up to 400:1 leverage with many forex brokers and most traders think the more they leverage they use the better – but they get stopped out quickly and their accounts are soon wiped out.

If you have a small account treat leverage with respect and don’t use too much – if you do, you will soon be in the 95% of losing traders.

The above are all common forex trading mistakes and if you make them, you will lose but there easy to avoid and if you learn digest and avoid them, you can get on the road to constructing a forex trading strategy, for long term currency trading success.



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Tom Long asked:


It happens almost every time the market reacts to a scheduled news release. New traders get cau ght off guard as they are unaware of what is coming. Since I work with new traders as an instructor of the FX Power Courses offered by FXCM, I always get emails from a few new traders asking why the market moved so much in such a short period of time. I usually refer them to the economic calendar at DailyFX (http://www.dailyfx.com/calendar/) and to the commentary offered by the analysts at that website.

Did you know that the US Federal Open Market Committee was meeting Wednesday, October 31st and will release a statement on US interest rates at 2:15PM Eastern? Did you realize that another major release was taking place this Friday, November 2nd at 830AM Eastern? This is when the US Department of Labor will release the Nonfarm Payrolls. These two events may be the biggest two movers of the world’s financial markets and will have a big impact on any open trades. You can find much more at DailyFX, including some recommendations on how to trade these events.

This is much better than not realizing what is happening and watching in horror as your profitable trade turns into a big loser in a matter of a couple of minutes. If you are trading , you should make it a habit to check the economic calendar at the beginning of every week to make sure you are aware of what is about to be released.

Being prepared for volatility is always better than being surprised by it. You may not be able to profit by the big moves, but you sure can protect yourself from big losses, and that may be more important to your success as a trader.

trading the various news events is popular in the FX markets. It is very tempting to want to jump into a trade right after an economic report is released and make 100 pips in a minute. Who wouldn’t want to do that? However it isn’t that easy.

By the time we see that release and can react, the market has already started to move. Usually by the time you are filled, the price has moved quite a bit from where it was before the release and a big portion of that 100 pip move may already be over.

That calls for a change of strategy. Unfortunately, many new traders think that means trying to find out what the release is before anybody else so they can place their trade first. But that is more wishful thinking than a change in strategy.

FXCM does conduct a webinar on how to trade the news events that does include three specific strategies that increase your chance of success. The schedule can be seen at http://www.fxcm.com/webinars-page.jsp. But one thing you will not hear in the webinar is what news service can get you the number first. Instead you will hear about how to react to the opinions of other traders and how to take advantage of those who think that being faster is better.



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Jason Fielder asked:


If you’re going to be a successful forex trader, then part of that involves learning what profitable forex traders already know. One of the major movers of the forex market are the economic reports of each nation.

This isn’t just restricted to the United States, either. Traders looking at the Yen, British Pound, Canadian Dollar, or Euro (or any currency, for that matter) will look at the economic news reports that are released by each of these nations.

There are many minor economic reports, some of which can spill over into the larger reports (look at the U.S. Housing bubble, for example), and while the “minor” reports are useful, this is going to concentrate on the big five, because these are the five major economic reports that will have the strongest and most immediate impact on the forex market.

These are also the five reports that are acted upon by the most traders, so being able to keep track of these are critical if you’re going to be able to keep a finger on the pulse of the Forex market.

The five major economic reports to keep track of are:

1. Unemployment/Non-Farm Payroll Reports

2. Interest Rates

3. Consumer Price Index

4. Trade Balance (Deficits vs. Surpluses)

5. Retail Sales

Unemployment/Non-Farm Payroll Reports

No matter what you’re trading , this is always one of the most important reports about a particular area’s economy. A low unemployment percentage is one of the strongest indicators of a strong, robust economy. Likewise, the opposite also applies. A country with a large unemployment rate is going through hard times.

Surprises in anticipated unemployment numbers can have a strong effect on the Forex market, as well. For example, if the unemployment rate is expected to be around 6.5% for the nation, and the report comes out with 4.9%, then that nation’s currency is going to strengthen thanks to the unexpected good news.

Interest Rates

Interest rate changes directly affect the strength of a currency. A higher interest rate will usually cause a stronger currency because it will attract foreign investors and traders. Interest rates are one of the BIGGEST key influences in driving a currency either up or down; especially since carry trades remain popular among forex traders.

Consumer Price Index (CPI)

The Consumer Price Index is a monthly report that gauges prices across the country and compares it to salary. Basically this means it tracks inflation, which is a major factor in the health of any economy. A sudden jump in inflation is never good news, and in some nations (see Zimbabwe) it can be absolutely disastrous, so keep an eye on when these reports come out.

Trade Balance

The trade balance refers to a nation’s trade surplus and/or deficit. This measures how much a nation exports versus how much it imports. A deficit means you bring in more than you send out, while a surplus is the opposite. Often times you may hear “trade deficit” referring to the United States, but this is not necessarily a bad thing – it depends on the situation and why the balance is tilted the way it is. This is also a monthly report in the United States.

Retail Sales

A nation’s report of retail sales may be the best indicator of how the common person feels about the economy. In the United States this is a monthly report of how sales are going for individual businesses. Some parts of the year are going to be much busier than others. December, for example, will always be expected to have great retail sales because of the Christmas holiday.

Knowing what these reports are and how they affect the markets will help you make better fundamental decisions when trading the Forex.



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Wally asked:


Trading Forex online has quickly become one of the most popular ways to invest online, and for good reason. Just by opening an account with a broker and investing as little as one dollar you can literally be making thousands per week. People have earned this much and more with hardly any experience so it can definitely be done.

Get Advanced Automated forex Trading Signal Software System

It sounds great doesn’t it? Making thousands every week at the click of the mouse. It can happen, but there’s a catch, the Forex market is complicated!

If you’re looking to make consistent profits with forex , and yes I do mean consistent thousands each and every week, you have to learn how to analyze and interpret complicated charts, graphs & applications. It takes time, energy and possibly money to trade this way, so let’s have a look at some alternatives.

News Analysis

A common way to predict the market is to interpret the news. News headlines do have a significant affect on movements in the forex market, and traders who realize this utilize news feeds by predicting how a certain headline is going to affect the currency pair they’re trading .

Get Advanced Automated Forex Trading Signal Software System

Analyzing the news sounds simple, but it can be difficult especially if you’re unsure how long a specific headline may affect a currency pair. Luckily there is another option.

Automated forex Software

Automated Forex software can be defined as a trading robot which makes trades on your account for you. A real automated software program is a “set it & forget it” system, where you can literally install it and then let the software trade your account on autopilot while you’re at the beach, joyriding, with the girl etc. This allows you to forget the complicated analysis and let the robots, which are programmed to analyze the market anyway, make accurate predictions.

A few years ago a profitable Forex software was around $2,000 or $3,000, probably less than a great one would make you in a few weeks but still a hefty chunk of change.

Get Advanced Automated forex Trading Signal Software System

 

 



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Regi Ross asked:


The internet is indeed a gift of today’s advanced technology. It has changed the communication industry and now it is being used for different kinds of tasks. It seems that everything is possible through the internet. Before, the only way to trade in the Forex market is to be there physically. But now, you can trade even in your own home or in the office as long as there is an internet connection.

If you think that only the intelligent individuals are involved Forex trading, you’re wrong because at present, average individuals can already trade in the market, provided they have adequate capital. The behavior of different currencies in the forex market can be compared to the movements of regular stock. The economies of most countries around the globe are fluctuating. Some currencies are highly priced but there are also currencies which have very low values. The Forex market is alive twenty four hours each day and so you can do your transactions at any time of the day and night. If you have an internet connection at home, you can monitor the Forex market trends and other vital info. Don’t worry if you’re not very familiar with Forex trading because you can find loads of information on the internet. Gather all the possible information you can get about forex trading; you must read, comprehend, and learn from the information sources because that’s one way to attain success. With the internet in your home or in the office, you can monitor all the real time market information without much difficulty.

Forex trading also have mechanics. For you to understand the trade’s mechanics, you will need some helpful tools. Before you invest in the forex market, you have to ensure that you’ve already developed the right trading skills to prevent possible loses.

There are some forex firms that help new traders in becoming more skilled in Forex trading by giving free demos, guidance, and helpful Forex news. You can even start investing in the Forex market with only $300. Starters often feel uncomfortable but as days and months pass, you can get the hang of it. With the aid of the internet, it’s much easier to learn about the current Forex market trends. You can also rely on a good forex broker especially if you’re new in Forex trading. Brokers can help you in developing trading strategies or in finding efficient trading systems. Aside from that, a good broker can also help you with fundamental and technical analysis of relevant data.

You too can earn promising rewards if you’re willing to assume some risks in Forex trading . However, it is vital that you minimize such risks so as not to lose your investment. Make use of all the possible online tools so that you can make educated Forex decisions.

What are your needs? You must be able to identify your needs so that you can choose a god trading system or perhaps a reliable broker. Take your time when researching about the latest trading systems offered in the market. Don’t forget to check the background of the broker as well.

Forex trading online can be easily carried out and you can expect more profits to roll in once you properly use the tools mentioned earlier. As a trader, you need to be disciplined and you must be very careful with all your trading decisions; being hasty will not get you anywhere.



Baby Sleep Tonight

Kent Douglas asked:


The forex market is quickly becoming one of the most popular investment vehicles because of its huge volume and liquidity. However, it is also one of the most volatile investment vehicles because of its sudden price fluctuations and the fact that most of the market is heavily leveraged. For these reasons, fortunes can be made or lost in short order making the need for a reliable investment system very urgent indeed. While many forex investors rely upon charts that track price movements and other forms of technical analysis to help determine entry and exit points, there are some investors who like enter and exit positions based upon news releases.

In theory, the smaller Forex retail traders should have a slight advantage when it comes to capitalizing on how the news affects the markets. With immediate Internet access and a never ending stream of brokers willing to execute trades at any hour of the day, small investors should be able to buy or sell a position quicker than some large conglomerate, mutual fund, or hedge fund. The market can literally adjust in minutes to relevant news releases so investors who move quickest will be able to capitalize-in theory.

Of course, it does boil down to knowing what news is relevant and then to determine how that will affect the currency exchange rates. Even news from countries other than those in your currency pair can play a significant role in short term price corrections. For those wishing to trade in the forex based upon news releases, there are 8 major currencies currently playing significant roles in the market, including:

1. U.S. Dollar(USD)

2. Euro(EUR)

3. British Pound(GBP)

4. Japanese Yen(JPY)

5. Canadian Dollar (CAN)

6. Australian Dollar(AUD)

7. Swiss Franc(CHF)

8. New Zealand Dollar(NZD)

Because the USD is a backer in nearly 90% of all transactions on the Forex, the release of key economic indicators from the U.S. are always important to the currency exchange rates. These data are released at regular intervals which supposedly levels the playing field between the large and small investors. In theory, they should be able to capitalize upon short term price fluctuations caused by the release of these key indicators:

1. Interest Rate Decisions by Central Banks/Financial Policy Makers

2. GDP rates

3. Balance of trade

4. Unemployment data

5. Inflation

6. Retail sales/manufacturing output

7. Business Confidence as determined by Outlook Surveys

8. Consumer Confidence Surveys

9. Manufacturing Confidence as determined by Outlook surveys

Trading on the Forex based upon news releases means capitalizing upon short term fluctuations in the market as it corrects itself. Because these corrections can happen in a matter of minutes, it is vital for this type of investor to capitalize quickly or risk jumping after the market has already adjusted for the new information. While this is theoretically possible, it is very possible that the big investors had access to the information prior to its release. If these investors have already shifted their investments accordingly, then the market will have already corrected for the news before it was released-at least partially. If that is the case, then the small investor will jump in too late and likely face a loss.

Indeed, trading upon news releases is very dangerous because it also encourages over trading -a factor known to lead to losses-especially on the Forex. This is why most forex investors rely upon technical analysis and their trusty charts when making decisions about entry and exit points on the market!



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James Woolley asked:


Trading the news is arguably the purest way of trading the forex markets because after all it is the fundamentals of the economy that drives currency prices in the long run. So how can you actually generate profits from trading the economic data releases?

Well let me first of all explain why these news announcements are so important. If you look at intraday charts for the GBP/USD and EUR/USD charts on a daily basis you will notice that the price will often move significantly between around 8.30 and 10.30 US time. This is partly due to the markets opening at this time but is also largely due to important economic figures being released during this period.

These announcements, particularly the more significant ones, will often create large swings and big breakouts, which presents trading opportunities for the forex news trader. By anticipating the effect of these announcements you can enter a position straight away in the hope that the markets will react as expected. Alternatively you can wait for the markets to settle before entering a position. This is often a better way of trading because you don’t have to contend with widening spreads which often happens immediately after a big data release.

The more important data releases such as interest rate statements and non-farm payrolls can create big swings in volatility. Sometimes you will also see huge breakouts lasting several hours or even days as a result of an a data release. It’s not always easy to predict how far a currency will move on any news, but technical analysis is often a useful tool for spotting potential breakouts. For example, if you use hourly candlesticks and you see several consecutive small candles leading up to an announcement followed by a much larger green candle after an announcement, it may be a good strategy to go long after the candle has closed.

Conversely you can also use technical analysis to help you determine if the market has overreacted to a particular announcement. For example sometimes you can see swings of 100-200 points after a big announcement, but very often it will reverse back soon afterwards, so there are often good opportunities to trade against any big price moves if you think the price has overreacted and moved too much too soon.

trading the news is certainly not easy and not many people become truly wealthy through forex news trading, but there are certainly some excellent trading opportunities to be had whenever there are some important market-moving economic data releases scheduled.



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