Forex News Straddling Strategy (Part I)
Traders around the world make a living by processing and translating information into money. The forex market is extremely sensitive to the flow of news related to it. Major short tern currency moves are almost always preceded by changes in fundamental views influenced by the news.
We live in an era where information can be extremely powerful and strategic asset. Timely information is vital to an individual or a corporation and information equals money especially to a trader. Shutting yourself off to the news can be suicidal.
Traders especially the day traders require the latest up to the second news updates so as to facilitate their trading decisions which have to be made at the lightening speed. The speed of the news dissemination is very important to traders.
Online news services display the latest financial and economic news on their websites. You can also get breaking news alert through your email. Many professional traders opt for instant online news services such as the Bloomberg, Dow Jones Newswires, CNBC and Reuters. Reuters and Bloomberg are very popular.
News is important to currency trading. Each new piece of information can potentially alter the traders perception of the current or future situation relating to the outlook of certain currency pairs. Market work on perceptions! Perceptions change, expectations change and prices change.
News that is of great importance to forex traders is generally related to a countrys economic, monetary and political situations and socio-political events that are happening around the world like in Middle East and North Korea.
A traders action is based on the expectation that there will be follow through in prices when other traders see and interpret the same news in a similar fashion and adopt the same directional bias as the trader as a result. These traders will be preparing to cover their existing positions or initiate new positions based on this news.
This is in a way an anticipatory reaction on the part of the trader as he or she assumes that the other traders will be affected by the news as well. Because of the expected impact it has on other market players, news is a very important catalyst of short term price movements.
If the news happens to be bullish for the USD, traders who reacts the fastest will be the first to buy USD followed soon by other traders. Other traders may be slower. They maybe were waiting for some technical criteria to be met before they jump on the bandwagon.
When others get hold of the delayed news in the morning newspapers or from their brokers, there will be many who will join in the frenzy at a later stage. An uptrend has already started. When these traders join the bandwagon, they will be reinforcing the uptrend. This progressive entry of the US Dollar bulls over time is what sustains the upward move of USD against another currency.
Almost the reverse will happen on the surprise bearish US Dollar news. Traders who get the news first will start selling US Dollar instantly on the assumption that when other traders will hear the news, they will also start selling. A downtrend develops. Other traders join soon. The downtrend becomes strong. Forex market is constantly in the throws of news driven volatility. - 23211
We live in an era where information can be extremely powerful and strategic asset. Timely information is vital to an individual or a corporation and information equals money especially to a trader. Shutting yourself off to the news can be suicidal.
Traders especially the day traders require the latest up to the second news updates so as to facilitate their trading decisions which have to be made at the lightening speed. The speed of the news dissemination is very important to traders.
Online news services display the latest financial and economic news on their websites. You can also get breaking news alert through your email. Many professional traders opt for instant online news services such as the Bloomberg, Dow Jones Newswires, CNBC and Reuters. Reuters and Bloomberg are very popular.
News is important to currency trading. Each new piece of information can potentially alter the traders perception of the current or future situation relating to the outlook of certain currency pairs. Market work on perceptions! Perceptions change, expectations change and prices change.
News that is of great importance to forex traders is generally related to a countrys economic, monetary and political situations and socio-political events that are happening around the world like in Middle East and North Korea.
A traders action is based on the expectation that there will be follow through in prices when other traders see and interpret the same news in a similar fashion and adopt the same directional bias as the trader as a result. These traders will be preparing to cover their existing positions or initiate new positions based on this news.
This is in a way an anticipatory reaction on the part of the trader as he or she assumes that the other traders will be affected by the news as well. Because of the expected impact it has on other market players, news is a very important catalyst of short term price movements.
If the news happens to be bullish for the USD, traders who reacts the fastest will be the first to buy USD followed soon by other traders. Other traders may be slower. They maybe were waiting for some technical criteria to be met before they jump on the bandwagon.
When others get hold of the delayed news in the morning newspapers or from their brokers, there will be many who will join in the frenzy at a later stage. An uptrend has already started. When these traders join the bandwagon, they will be reinforcing the uptrend. This progressive entry of the US Dollar bulls over time is what sustains the upward move of USD against another currency.
Almost the reverse will happen on the surprise bearish US Dollar news. Traders who get the news first will start selling US Dollar instantly on the assumption that when other traders will hear the news, they will also start selling. A downtrend develops. Other traders join soon. The downtrend becomes strong. Forex market is constantly in the throws of news driven volatility. - 23211
About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Try Netpicks Forex Signals Free. Learn Forex Trading!
posted by X - Men @ 2:54 AM
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