It is not just about knowing about Technical analysis when you trade, it is also very essential to have knowledge what makes the forex market move.
News Makes the Forex Market Move
There is a fundamental force behind the trend lines, double tops, and head and shoulder patterns, these movements and force are called the News!
The point is that news affects the way we observe and perform on our trading choices. There is no difference when it comes to trading currencies.
However, there is a distinct dissimilarity with how news is controlled in the stock market and the forex market.
Be it big traders, small traders, skinny traders, or husky traders, all have to rest on the same news to make the market move since if there was not any news, the market would barely move at all!
Since it’s the news that makes it change, the news is very essential to the forex market. In spite of the technical, the energy that keeps the forex market going is the News!
Two Ways to Trade the News
Directional Bias – this means that you anticipate the market to change a specific trend as soon as the news report is out. When considering for a trade prospect in a specific direction, it is good to identify what it is regarding news that will cause the market to change.
Non-directional Bias – this is a more common news trading strategy . This technique neglects a directional bias and just plays on the point that a big news report will generate a big change. It is not important which direction the forex market moves. The feeling is, you just want to be there when it happens.
This means is that as soon as the market moves in any direction, you have a idea in position to enter that trade. You don’t have any preference as to whether prices will increase or decline.
Actual Number vs. Consensus
Actual Number – once a news report is out, this is the digit that is specified.
Many weeks or days before a news comes out, there are expert that will turn up with some kind of prediction on what numbers will be out. This digit will be different amongst different analysts, however, in general, there will be a collective number that most of them settle on and this number is called a consensus.