Trading News Events
One of the great advantages of the Forex market is the ability to profit large amounts from sharp movements. For example if economic data comes out showing a different result compared to the expected figure, then a currency pair will respond immediately, often presenting a large amount of PIPS.
As shown on the Non Farm Payrolls example, following the release the EUR/USD jumped by over 50 pips in less than 15 minutes.
A common way to trade news is to look for a range before the result is released and to trade the break out.
Further information regarding News trading will be explained in strategy course.
Keeping an eye out for different news releases
The list below displays the times when most of the economic data is released for each country.
Symbol Country Time (GMT)
USD United States 13:30 - 15:00
EUR Germany 07:00 - 11:00
EUR France 07:45 - 09:00
EUR Italy 08:45 - 10:00
JPY Japan 23:50 - 04:30
GBP Great Britain 07:00 - 09:30
CHF Switzerland 06:45 - 10:30
CAD Canada 12:00 - 13:30
AUD Australia 22:30 - 00:30
NZD New Zealand 21:45 - 02:00
Whipsaws
Even though this term might be uncommon among traders, many have experienced the annoying situation where the currency pair suddenly flips knocking you out on your stop loss order, only to suddenly to turn around and hit your take profit, without you in the trade. As major economic data is released, volatility tends to increase dramatically across the board, often sending the pairs into mayhem before they head off in their correct direction.
Be warned that the market can sometimes jump up to 50 pips in the wrong direction in less than a couple of seconds before heading in the correct direction. You might catch the right direction but you can also see your position in negative territory really fast.
Conclusion
In this lesson we covered the various fundamentals, major economic events and one trading strategy on how to trade around key events. The subjects covered the main aspects of fundamental trading including an affective trading strategy that can help you next time a major event is scheduled to be released. Just remember that when trading the news, use a stop loss to prevent large losses.
Before heading on to the next lesson, remember that practice makes perfect.
If You Haven't Started Trading And Are
