Waiting for news releases or economic news that affect forex is indeed thrilling. So, what kind of news have traders been waiting for Broker-Analysis.com The short answer, the most awaited forex news release that has a significant influence on price movements. Then, how do you know if the most awaited forex news has a significant influence? To find out the most important and most awaited data, a forex trader must be diligent in observing the forex calendar.
Forex trading with a fundamental style that relies on news as the primary indicator is often confused by many people. The majority of novice traders argue that forex trading means having to be on standby in front of the chart 10 minutes before the news release and take a position when the news is released. Though it’s not that simple. Trading fundamentals are more than just waiting. Fundamental trading techniques generally take the news as the primary indicator, but not just news.
Most Awaited Forex News Releases and Their Effects
US Non-Farm Payrolls (US NFP) data, for example, is a statistical data that calculates the increase in the number of jobs in the last month in the United States (US). This data is compiled by the US Department of Labor and released on the first Friday of each month. US NFP is one of the most awaited forex news by traders.
US payroll data greatly influences the movement of instruments in financial markets such as the foreign exchange market, the stock market, the bond market, and the commodities market. Therefore, market players in the world are very concerned about this data.
For information, NFP and Unemployment Rate are two different things from the method of measurement. So, the NFP is not necessarily good, the unemployment rate is also good or vice versa. But logically, if the NFP is good (increases), the unemployment rate is also good (decreasing).
The NFP calculates the change in the number of people working outside the agricultural sector. In contrast, the Unemployment Rate calculates the percentage of the population who are either unemployed or looking for work.
When Forex News Is Most Awaited, It Turns Gray?
Sometimes the most awaited forex news is disappointing. For example, when the Nonfarm Payroll event is below expectation, the US Dollar should sag, but it is bullish. Traders who are already confident about selling the Dollar will finally bite their fingers. After being traced, it turned out that salary growth was soaring and the forex market paid more attention to this. This means that the price movements that are claimed to be triggered by certain fundamental news releases often do not confirm to an already understood “formula”.
According to a review on How to Trade Forex Using Fundamental News, this is not because fundamental news cannot be trusted, but because the response of market participants to certain news will vary from time to time, and there is not only one investment asset. Then what to do? Never stick to one news release. Consider other indicators related to it. It is even better if the trader also has an understanding of technical analysis.
News Release for A Technical Trader
Technical traders consider sharp spikes or dips in price during news releases as things outside of technical calculations and are considered too risky as a basis for opening positions. If we compare it, the price movements during this news release are like lake water, which is usually calm and clear, suddenly stirred so that it is cloudy so that the depth of the lake cannot be estimated.
Extreme price movements during news releases, if observed in short time frames, often come out of the trend, and it is difficult to predict the depth (or height). Frankly speaking, I used to (admit to) being a technical fan, so I didn’t open positions when the news was released. At most, I only monitor positions that are still open. In fact, sometimes, a few hours before high impact news, I have refrained from opening positions.
Was the decision not to open a position during this news release, right? Well, here it is! After observing and discussing with fellow traders, it turns out that many of them are waiting for news to open positions. In fact, they are kept up all night waiting for high impact news which, unfortunately, the release time is right at bedtime. Finally, I was tempted to try to enliven the market during the news release.
Simple Tips for Trading with the Most Awaited Forex News
Keep in mind that relying on news alone to calculate prices is a step that is not recommended. For this reason, while waiting for the release, it’s a good idea to do the following tips:
1. To avoid the risk of slippage or price jumps during important news releases, it’s best to open a position sometime after the news release. Approximately 15-30 minutes after release.
2. Determine the risk/reward ratio and place a trailing stop. It only oriented to fundamentally accurate news sources, not rumors with unclear origins.