How news can destroy technical analysis
Traders need to know about this Forex trick, as the impact of news on the profitability of transactions in the Forex market. It is, all about economic news.
Not all traders know how to properly deal with the news. Forex trick is to make the most efficient use of the time between receipt of news information and the official release of its broadcast. Experienced traders are tracking the news that may affect the situation in the Forex market, use this time to close their positions. In this way, they manage to maintain their deposits. This is the first Forex trick when working with the news.
Less experienced traders try to build on their knowledge own news Forex trading strategy. It should be noted that such trading strategy is quite dangerous since it is based on technical analysis ineffectiveness in the Forex market at the time of important economic news release. Traders should not forget that sometimes the price will break through all the levels at once, when important news comes to the market. Therefore, we must recognize that technical analysis during the news publication almost does not work and we shouldn’t rely on it. In addition, the trader must possess a thorough fundamental analysis to predict the quotes of currency pairs after some news release in the Forex market. Lucky traders often make profit on the news. News affecting the Forex market can be found in the financial calendar of brokers, there is usually specified time-critical news.
To use this trick the trader needs to get acquainted with the Forex concept of “currency pair“. Economic news always affects the price of the currency pairs that are directly linked to the news. In order to work with the news, you need to find a good economic calendar. This calendar is usually specified what the currency pair will be touched by specific news.
There are currency pairs, which specifics cannot predict how they might be affected by the news. In this case, there is the difference between projected data and the data that published officially. This discrepancy can help the trader to make a profit on the Forex market.
The second Forex economic news trick is that before it will be the difference between predicted official data, the trader should have time to enter the market.
This requires a special Forex technology. For the implementation of Forex trading deal the trader should have a provider of essential critical data. In addition, the trader must first conduct thorough analysis of the way, most of all, Forex market reacts to the divergence between the data. The trader must to know what should be a mismatch of projected and actual data specific news that the news affects market price for that there is a special service too. But the trader can use his expertise. Once the transaction is opened, the trader should determine the breakeven point and after receiving a profit – to close trading position.