Information travels fast in today’s digital age and news events move markets instantly. Just about everyone is connected and receives news from their preferred sources on their mobile device. Forex traders need to differentiate between two different categories of news. One category consists of economic news which are released at a certain time and date. It is very simple to prepare and include those releases into a trading day as well as strategy. The second category consists of unexpected events, often geopolitical news, which happen at random and require and instant reaction as they develop.
Both categories have the potential to move the forex market. Some events result in no reaction at all. This can either be due to the nature of the event or because market participants already discounted the event into their analysis and price action was adjusted accordingly. In those cases a certain asset could actually move in the opposite direction as would have been the case otherwise. This is referred to as ‘buy the rumor and sell the news’. For example if the rumor for a certain release is for a positive outcome, the affected asset will contract as the rumor is confirmed.
This is especially true of the sources of the rumor are very valid. Professional traders act on the rumors and make the necessary adjustments. Once the rumor is confirmed the same traders take profits which causes the price to fall, potentially below the levels before the buying started. A reversal often materializes following the short-term decrease in price action. This often happens with economic release or political elections. Many forex traders prefer to remain on the sidelines as those news events and economic reports are announced.
Some news events have a significantly large enough impact that price action could be changed. A previously bullish trend could be changed to bearish and vice versa. It is therefore always important to be aware of what is going on and understand how certain types of news can impact currency pairs. Even forex traders who trade purely technical trading strategies or use EA’s built with only technical indicators, need to pay attention to news events as it can create better entry or exit positions for their forex portfolio.
There are many sources for forex news online. Many of them are solid sources, but fake news have risen in popularity in order to influence markets as well as other events. They are often distributed on the most popular social media sites as they can reach the most amount of people in the fastest time at no cost at all or very little cost. It is therefore very important that forex traders chose wisely which outlets to rely on for their news. It is wise not to get them from social media channels.
For economic news, there are free economic calendars available and forex brokers, such as PaxForex, make them easily available. When it comes to other forex related news, it is best to rely on confirmed business outlets which are focused on business news. Besides reporting the news online, they often operate a TV network which many forex traders tune into. Bloomberg is one of the market leaders when it comes to business and market moving news. Their TV programs can be streamed online for free or their app downloaded on a mobile device.
Many traders subscribe to forex news online editions of popular finance magazines. Alternatively many forex brokers distribute market moving events and analysis to all traders in order to better understand price action. Forex news 2018 editions are set for record breaking readers as more and more new entrants arrive in the forex market. This means that the demand for top notch news reporting as well as the analytical breakdown will continue to increase. Forex traders should always be prepared for unexpected news announcements which appear random and can’t be planned for. Preparation and knowledge will greatly reduce trading risk and mistakes.