Recap on Trading News in Forex

Let’s recap the basic concepts behind trading the news:

• News matters – News matters because it either meets, beats, or missed expectations. When economic reports do not match perfectly with expectations, the market moves wildly.
• Timing – You’ll want to be sure to survey the market a half hour before the news is scheduled to come out. Watching early means that you can observe price action before the release and also make a plan for entering your orders for that particular news item.
• Instantaneous profits – News it inherently fundamental, but trading it in the short-term is not. A combination of technical and fundamental analysis works well for making sense of the markets before and after a major news event.
• Direction – You can attempt to predict the market movements, or you can trade without bias and place two orders. How you attempt to make money on the news is of little importance, what matters is that no matter which you choose that you execute it perfectly.
• Patience – Some news items make big moves in the market, whereas some go by without anyone ever noticing. You’ll have to have the patience to wait for the big fish to make money in trading forex news. The small fish may be many, but they’re not worth eating.
• Crazy traders – Watch out for the frenzy that comes with forex news items. If you’re a decidedly non-news trader, then get out of the way! If you’re a decidedly news trader, then pile on in—but only if it makes sense to you!

Fundamental analysis isn’t all about the short-term movements that follow news items. While we paid special attention to the short-term, the coming sections will have a focus on uniquely long-term fundamental studies of the foreign exchange markets.

In fact, hiding behind the news are more complex economic ideas that may shape the movements of a particular currency pair for many days, weeks, months, or even years after the news hits headlines. While some traders focus on the news for short-term trading, there is even more to trade in the longer term.

In the coming sections we’ll explain each individual news release and fundamental concept. You’ll soon understand everything related to fundamental analysis in the foreign exchange market, but there’s still more reading to do!