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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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