In the foreign exchange market, professionals and companies must make the smartest and fastest decisions possible in order to profit from the flow of money. Having access to real-time forex related news and analysis makes the trader's job easier and is a true competitive advantage. Quality forex related news and analysis give traders the ability to closely monitor trends and developments in the forex market around the world and react faster to opportunities.
Economic data tends to be one of the most important catalysts for short-term movements in any market, but this is particularly true in the currency market, which responds not only to U.S. economic news, but also to news from around the world. With at least eight major currencies available for trading at most currency brokers and more than 17derivatives of them, there is always some piece of economic data slated for release that traders can use to inform the positions they take.
The U.S. dollar is used to back or finance nearly 90% of currency transactions on the forex market. What this means for forex traders is that U.S. government releases of key economic data will tend to have a larger effect upon exchange rates than the data of other nations. However, there are times when the economic data from another nation (or an economic bloc like the Euro Zone) will have a more significant effect upon exchange rates than information released from the U.S. government.
The first thing to consider while trading forex is that the news itself holds little importance. What matters more is the trader's analysis of the same. Since forex news analysis is not objective, the safest thing to do is to take an overview of the news and draw your own inference. To trade like a pro through forex news, simply review the news and evaluate how it moves currency prices. Keep a look out for potential trend changes, which generally occurs when bullish news fails to push the prices up or bearish news fails to lower the prices.
As we've seen, the currency market is particularly prone to short-term movements brought on by the release of economic news from both the U.S. and the rest of the world. If you want to trade news successfully in the forex market, key considerations to keep in mind are, knowing which releases are expected when, which ones are most important given current economic conditions and, of course, how to trade based on this market-moving data.