The fundamental way of trading Forex with fundamental news: part-1.

Trading Forex on the back of the fundamental news is one of the most important factors of trading Forex. Economic data tends to be one of the most important catalysts for short-term movements in any market, but this is particularly true in the currency market, which responds not only to U.S. economic news, but also to news from around the world.

Knowing what Data is going to be released is not enough you have to know the implications of that Data its significance to the market and impact. Is it going to impact the currency right away? Or is going to be a delayed effect? Maybe a combination of data release on the day will set the tone for the day if not the week.

There is so much Data being released every day, almost every hour somewhere and you need (no, you must) know which ones will have the most impact on the market when is released. Two things you must know when it comes to trading on the back of fundamentals news, which Data is important and what is the most traded currency pairs in the world.

Important Data  

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1. Interest rate decision
2. Retail sales
3. Inflation (consumer price or producer price)
4. Unemployment
5. Industrial production
6. Business sentiment surveys
7. Consumer confidence surveys
8. Trade balance
9. Manufacturing sector surveys

Most traded currency pairs

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1. EUR/USD
2. USD/JPY
3. AUD/USD
4. GBP/JPY
5. EUR/CHF
6. CHF/JPY

 

The US dollar is the most traded currency in the world about 90%, which means data coming from the U.S is the one you should watch the most. You must have a position (strategy) of how to trade and one of the good practice to not only look at the data, but also what kind of data are it and its importance.

Before the news come out, the market will already be forming an expectation, which can lead to a move in the currency pair. It goes to say that you should look at what the market is saying relative to the data that is going coming out.

As we’ve seen, the currency market is particularly prone to short-term movements brought on by the release of economic news from both the U.S. and the rest of the world. If you want to trade news successfully in the FX market, key considerations to keep in mind are knowing which releases are expected, which ones are most important given current economic conditions and, of course, how to trade based on this market-moving data.” Also keep in mind that the market will be highly volatile during the news and the broker may try to rip off your profit through slippage. That’s why we recommend to use a good broker like Oanda or FXCM when trading news.

Happy trading!

Thapelo