What is news trading?
In trading the economic news and events They bring with them strong movements in the financial markets at the time of publication. In trading, not knowing this can mean an added risk when trading Forex, stocks or futures. It is possible that more than once we have suffered the consequences of posting events with an open position for not having carried out a fundamental analysis. In such situations we observe in our brokers how the market suddenly takes a strong impulse and sometimes the price goes in our favor and other times the price goes against usthis is what is called news trading.
Before the publication of an economic news the market (fundamental analysis) reacts, and on many occasions in a very violent and unpredictable way causing prices to fall or rise drastically. If these situations are not handled well, it is possible that the wrong decisions are made, those that irremediably lead to loss due to a lack of planning and strategies.
At Traders Business School we do not teach news trading in any of our courses, but we do explain how to be prepared for our brokers and take the necessary actions for high volatility news through fundamental analysis, anticipating their releases and avoiding unnecessary risk. , to the extent possible to be exposed to the market during news of extreme volatility in markets such as Forex, stocks or futures.
Fortunately or unfortunately there is economic news daily. This fact cannot be ignored and every self-respecting trader should be aware of the effects these events have on trading. It is not necessary to have a higher education in economics to understand how economic news affects prices.
When does economic news occur?
Economic indicators and sub-indicators are calculated and published with certain periodicity. There are indicators quarterly (such as the Gross Domestic Product, or GDP), other monthly, such as inflation and employment data; and even others are weekly (such as Crude Oil Inventories).
There is a large number of economic data and a considerable number of countries subject to these datawhich gives rise to economic news being published on a daily basis: There is economic news every day, in any country.
economic news they are usually published in the mornings In most cases. Now, the mornings for a country do not have to coincide with the morning for the trader. Depending on the geographic region you are in, you will need to take into account the time difference.
For this reason, it is necessary to have an essential tool for any operator, the economic news calendar. At DTP we publish our own economic news calendar every morning, before the start of our trading session.
economic news calendar
As its name indicates, the economic news calendar It is a agenda in which we can see the next economic appointments, the date and time of the publications. This is something that must be kept in mind in trading to avoid added risk, as the market can become very volatile and move the price, for example in any Forex value (oil, EURUSD, etc), very violently. Being attentive to economic news is part of the strategies that we must have (fundamental analysis) to control the actions to be carried out before this movement in the market happens.
But it does not simply inform us without further ado of the date and time of an economic event, the economic news calendar offers a series of interesting data that we must keep in mind to operate in our brokers with news and economic events. Let’s see them in detail, but first let’s see what an economic news calendar like the one you can find on our website looks like:
- The first column corresponds to the local time (in this case the Spanish peninsular time) of the publication of the news.
- The flag indicates the country to which the economic news corresponds. It will especially affect your currency (or the currency pairs that cross it on the Forex market).
- Next, we are informed of the data itself that is going to be the subject of the news. This is very relevant when trading.
- The signs of the bull indicate the importance of the news for operators. The more important a piece of news it will have a greater impact on the pairs it affects and will generate greater volatility and risk in the markets (Forex). The three signs with the bull’s head indicate that the news is of maximum importance, two of medium importance and a single sign represents news of lesser relevance.
- The next column is where it should appear the data once published. If no data appears in this column, it is because the data has not been published yet. We will recognize this column because it is usually called “Actual” (current data). Next, we have the column called “Forecast”. Here appears the expected data before publication. It’s about the “analyst forecast” since a series of experts are in charge of projecting this data. It can be interpreted as “what is expected to be published”.
- The last of the numerical data corresponds to the column “Previous”. is the post immediately prior to “Current” (the data to be published). It is important to know if the “Previous” value is higher or lower than anticipated in the “Forecast” before publication, because this represents if news is expected to be good or badaffecting positively (increases in prices) or negatively (decreases in prices) the financial instrument that we intend to operate.
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