Does Fundamental Analysis that? Fundamental Analysis to predict price movements by translating various information on economic conditions, including news, reports and policies issued by the government, as well as rumors.
On Fundamental Analysis, a drastic price movements occur when there are events that are unexpected. These events can include the increase / decrease in interest rates from central banks, to political events or wars.
Examples are the events of 9 / 11. When the events of 9 / 11 happened, rate USD weakened because every people estimate the event will significantly affect the U.S. so it is probable USD weakened. This incident caused many market players to sell USD. Impact USD rate actually dropped dramatically.
How To Trade Forex By News (News Trading) Basically, Forex Trading on News (News Trading) is a trading technique by comparing the difference between the actual results of economic news to the value of forecasting (prediction) of such news.
Generally, if the difference between actual value and the value forecastnya large enough, then the price movement will be more drastic than if the difference is little, or in accordance with predictions. But then again, there are other factors you should consider if you want to use the technique Trading News
Important factors to consider for News Trading:
1. The types of economic news what is considered important by the market and potentially lead to large price movements (drastic). The more important then the price movements that occur usually also the greater
2. How big is the difference between the actual and forecast (prediction) of the news. The greater the difference between the actual value with the forecasts, the greater the price movement that occurs
3. Daily High-Low Range (Range) A few moments before the news was announced. The smaller daily range of the currency in question before the news announcement, typically relatively larger price movement
4. Currency Pair type you use, the enlarged spread, and slippage. There is a certain pair of little "odd", because although there is news that should be important enough to pair it, but it did not happen quite large price movement, there are even times when prices barely moving. There are some forex brokers who deliberately encouraging the spread as an important news announcement. Also often occur slippage (prices do not fit) between the price that you order with which you get.
| Economic News It is important that potentially cause the market price movement |
| Interest Rate Announcement |
| Growth / Change of Employment (Employment Change) |
| Value of GDP (Gross Domestic Product) |
| Trade Balance |
| Consumer Price Inflation Rate (Consumer Price Index) |
| Retail Sales Rate (Retail Sales) |
| Level Material Durable Orders (Durable Goods Order) |
Forex Trading Techniques Based on the News (News Trading) There are 2 ways that are often used by traders to trade forex news (News Trading):
1. Using Stop Buy and Sell Stop Order
This technique is done by using the Stop Buy and Sell Stop order is pending before the important news was announced. The advantage is that if the price moves do not fit predictions, it is still possible to get profit. The risks can be minimized by entering a stop loss is adjusted to the type of news.
The downside of this technique is if there is whipsaw, where markets were irregular move to 2 different directions quickly (example: prices go up, down, and rise again within a relatively short time)
2. Direct trade in the market price at the time the news was announced.
This technique is done by comparing the difference between actual and forecast values of certain news. If the difference is large enough then the trader will immediately open buy or sell at market price.
The advantage of this technique is likely to get a bigger profit than technique 1 above.
The disadvantage is that if market movements are not held properly, the trader in question will suffer substantial loss because there is no stop loss to protect its position is. If you want to use this technique then you should execute forex broker you have an instant and you have a very good source of news. For those of you who are beginners, you should not use this technique because it is very risky
