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DOES FOREX NEWS TRADING REALLY WORK?

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FOREX NEWS TRADING IS SPECULATING ON HOW THE MARKET
WILL RESPOND TO THE ANNOUNCEMENT OF MAJOR NEWS
STORIES OR THE RELEASE OF MARKET DATA. WHENEVER MAJOR
NEWS IS RELEASED, THE MARKET WILL INVARIABLY RESPOND.
THE QUESTION IS WHETHER THE MARKET WILL RISE OR DECLINE
BASED ON THE NEWS. MANY TRADERS WILL TRADE BASED ON
THEIR BELIEF ON HOW THE MARKET WILL RESPOND. THERE IS
ONLY ONE QUESTION THAT CAN BE ASKED ABOUT NEWS
TRADING. DOES FOREX NEWS TRADING REALLY WORK?
MOST MARKETS WILL HAVE SLIGHT MOVEMENT PRECEDING THE
ANNOUNCEMENT OF MAJOR NEWS EVENTS THAT ARE REGULARLY
SCHEDULED. THESE EVENTS MIGHT BE THE RELEASE OF MARKET
INDICATORS OR UNEMPLOYMENT NUMBERS. THIS IS BECAUSE
THERE WILL BE RUMORS ABOUT WHAT THE ACTUAL NUMBERS TO
BE RELEASED WILL BE LIKE. TRADERS WILL THEN PLACE A
POSITION BASED ON HOW THEY FEEL THE MARKET WILL
RESPOND IF THESE RUMORS ARE TRUE.

THE FOREX MARKET PLACE IS OPEN FOR TRADING 24
HOURS A DAY. ANY NEWS ANNOUNCEMENT IN ANY
COUNTRY DURING THE DAY OR NIGHT WILL IMMEDIATELY
HAVE AN IMPACT ON THE CURRENCY MARKET. USUALLY THE
MARKET WILL HAVE A SLIGHT CHANGE JUST PRIOR TO THE
NEWS ANNOUNCEMENT AND THEN THE MARKET WILL HAVE
A GREATER CHANGE AFTER THE NEWS ANNOUNCEMENT.

WITH FOREX NEWS TRADING A TRADER IS BASICALLY
TRYING TO SPECULATE ON THE IMPACT OF THE NEWS
ANNOUNCEMENT. THERE IS NO QUESTION THAT MAJOR
NEWS ANNOUNCEMENTS CAN HAVE A PROFOUND IMPACT
ON THE FOREX MARKET PLACE. THIS IS WHY MOST FOREX
TRADERS WILL TRY TO CAPITALIZE ON THE RELEASE OF
MAJOR NEWS ANNOUNCEMENTS.

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THE CONTRARY POINT NEWS TRADING IS THAT MOST INVESTORS
ALREADY FOLLOW THIS STRATEGY. SINCE THERE IS A WIDE
NUMBER OF TRADERS INVESTING BASED OFF THE NEWS, THE
MARKET IS QUICK IN RESPONDING TO THE CHANGE FROM THE
ANNOUNCEMENTS. THIS QUICK CHANGE IN THE MARKET LIMITS
THE ABILITY FOR TRADERS TO PROFIT FROM THE NEWS
ANNOUNCEMENTS. FOR THIS REASON MANY PEOPLE DO NOT
THINK FOREX NEWS TRADING IS A PLAUSIBLE STRATEGY.

UNLIKE OTHER TRADING STRATEGIES, FOREX NEWS TRADING
DOES NOT REQUIRE ANY TECHNICAL ANALYSIS OF THE MARKET.
SINCE MOST NEWS ANNOUNCEMENT HAPPEN VERY RARELY
THERE IS NO TECHNICAL ANALYSIS MODEL THAT WILL BE ABLE TO
ACCOUNT FOR THE INTRODUCTION OF THE NEWS. THIS ALLOWS A
TRADER TO USE OBJECTIVE REASONING IN ORDER TO DETERMINE
HOW TO PLACE THEIR TRADES IMMEDIATELY BEFORE AND
IMMEDIATELY AFTER THE ANNOUNCEMENT OF MAJOR NEWS.

MOST NEWS ANNOUNCEMENTS HAVE A SHORT TERM
IMPACT ON THE FOREX MARKET PLACE. VERY FEW NEWS
ANNOUNCEMENTS WILL HAVE A LONG TERM IMPACT ON THE
MARKET. WITH THE NEW ANNOUNCEMENT HAVING SUCH A
SHORT TERM IMPACT, TRADERS WILL LOOK TO QUICKLY
MOVE IN AND OUT OF POSITIONS. THE IMPACT OF THE NEWS
MAY BE FELT FOR ONLY A DAY OR SOMETIMES LESS. YOU DO
NOT WANT TO HAVE A LONG TERM POSITION IF YOU
TRADING BASED ON NEWS.

A GOOD STRATEGY TO FOLLOW WHEN FOREX NEWS
TRADING IS TO PLACE TWO ORDERS ON BOTH ENDS OF THE
CURRENT MARKET PRICE. IF THE MARKET MOVES UP THEN
YOU CAN KEEP THE ORDER THAT PROFITS FROM THE MOVE
AND CANCEL THE OTHER ORDER THAT IS BELOW THE
CURRENT MARKET PRICE. THIS ALLOWS YOU TO PROFIT
REGARDLESS OF WHETHER THE MARKET RISES OR
DECLINES.

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