The major resources needed for market developments are news and economic data, although in a dissimilar way. Many of the beginners in trading will anticipate that news releases and economic events will have immediate effect on the prices. They will get disturbed and will complain if things do not go this way. If we see the facts, it is possible that it is very profitable for long-term if one is ready to keep waiting for the payoff. We will be looking at various data types in this article and will classify them according to the basic criteria. We will also be telling of how market prices, especially those of greater value and impact, can be determine by news releases in a long term. Moreover, we will have a brief look at the short term news trading and how to attain it.
In between 8:30am and 10 am, there are the most news releases, as well as trading is most quick and active in this period. Market openings also takes place during this time as the option expires and traders start to absorb and evaluate overnight data, so that they can place all their developments in general context for later usage. The profit/loss is also high in this period as the volatility is high. In order to being caught in wrong breakouts and whipsaws, there should be proper risk controls and money managements.
It is unpredictable of how the market will react to any type of data. This is not only the case when the new release is in line with analyst expectations, but also when significantly surprised by the new release. It is impossible to predict of how volatile the market will react to a new release. In response to the new release the market will sometimes be in between range of fifty or more pips. A 100-pip movement in the span of one or two minutes will sometimes be released and will be entirely negated by price action for the rest of the day. Conversely, while the news releases are mostly volatile, a very unusual release may get welcomed and get treated with relative calm. Now what will be the cause of cause of this great unpredictability?
When some news is released there will be many traders who will react instantly to gain maximum benefit and then leave. This will suddenly change the market position to be successful and gaining as these instant reacting people will be trading. However, this effect is only short-term. As soon as these traders will start leaving the market, the traders who respond in greater time span will join the market. If they take care of some basic aspects and market conditions are also favorable, they can be very successful.
Following are the two ways to trade news:
1. Long-term: There had been several studies that have concluded that the effect of some of the announcements of news have made their first impact not in a single day but over a month or week’s time. This is not in accordance to the expected time duration in which the markets have thought to discount them.
2. Short-term: To make an immediate impact of news you must have a clear idea for the criterion that will make the news of trade more justified and attractive. Many of the traders will want a 50 percent surprising data in order to make the trade attractive. For beginners, however, can use the beginning period to master his skills in the field.
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