Trading forex by using economic news are very common strategy that some trader do! but of course not all trader! since this kind of trading will need deep understanding about fundamental economy, so it will not easy to do, but it doesn't mean impossible! in fact it's very easy, as long we know a little 1 or 2 things, and I am sure you can make profit from this strategy! bellow are a few tips that you can use to trade news!
- first, find website that provide about economic news! you can go to, dailyfx, forex factory, fxstreet and etc. this 3 site are the most famous site , that most news trader will use it! but if you can find another site, that would be more than enough!
- secondly, take a look what important news that will comes out, try to chose 1 or 2 news, not all of them, cause if you do that! I am afraid you'll confuse by yourself! and loosing focus! try to pick the news that have high impact, and this is important choose news that related or correlated with major pair currency, unless you trade exotic pair!
- third step! combine news strategy with technical analysis i.e Trend! watch the trend , if trend and news match each other, you could make decent profit! it could be range between 50 pips up to 100 pips in single trade!
- fourth step! use risk management, i.e stop loss! this is very important! no matter what, when we trade with news we have to understand, sometime market will move against our trading positions! when that happen you'll not worry to much since you already setting up stop loss!
- fifth, this step should be on third step but for some reason this step should be use on last, because if we use this on third step this could be not effective! find the weakest and strong currency if currency that you chose are the stronger and the weakest you could hit jackpot! cause most of time if we trade the strongest and the weakest currency it will likely move without a fight! it mean its very safe to trade! but if there's a an important news, it will push more further! for example if EUR/USD down trend, and there is high impact news for US, meanwhile USD are the strongest currency on that day! if news result match with prediction, EUR./USD will move the bottom without a fight from euro! sometimes this could happen! but of course this kind of things will not happen all the times! but who knows right, you have that lucky day ;)
- The last steps! last but not least! you trade if economic news comes out! it mean after the news! not before! yes, it could be late! but it is better, this step is to avoid something that unwanted that could happen! there's a times that news result as not as our prediction! and this often happen, the idea of this strategy , if everything on the rich track e.g trend, weak strong, news, and result are match! you could make decent profit on that day! but also I have to admit there is a times, when everything match but market move against our positions! that could happen! in fact I lose because of that! and when that happen, trust me! everything will be a waste, but since you set stop loss, your loosing would be minimal! in a nutshell don't over confidence! :)
I hope my tips about news trading strategy could help you to make nice profits ;) and when that happen! don't forget to make donation to poor people! cause I do believe sometime when we give something to others, we will get more ! :) don't take my words about just do it! about the tips above you should test first using demo account! if you already good analyzing the news, then use real money ;)
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