IMPORTANCE OF FOREX TRADING BY FUNDAMENTAL ANNOUNCEMENT
As people differ from one another, so do their preferred types of trading backgrounds in pursuing their goals. That can ring true for the method of using fundamental announcements and economic calendars. The approach is used by some in conjunction with analytics. Others pass it by, which can create the opportunity for those who keep up.
The Forex market is a very volatile market that can change in direction because of the differences between two types of currency pairs. Influences can depend on the factors of government and events having to do with the economy.
Although some traders are more based on analytical methods, it can always be a great idea to look at the day’s events. The economic calendar can be an excellent tool for the Forex market. Thankfully, some trading software is integrated with a feature to track economic events. Otherwise, you can seek out other calendar updates online.
Fundamental announcements can make a huge spike in the market –and can be a great tool to trade-off when the announcements become present. Since some announcements are tied to higher volatility factors, those are expected to make more of a jump within the event.
Sometimes these announcements can completely make a turn in direction for the Forex market, making these vital resources. One example is when a major event happens within a government. That can cause a snowball effect within the Forex market. Some of the announcements you see will involve speeches, group meetings of cabinet members, permits, workers’ rights, and housing market; all playing a rather big part of citizens’ lives.
One example is the recent Brexit events, including cabinet members’ resignations. As political leaders in the United Kingdom and the European Union discuss the separation, trading of currencies such as the Great Britain Pound (GBP) can see volatility.
When viewing the economic calendar, a trained eye can get a guess of what effect may be seen. But not always. As the Forex market is always on its plans, it is still hard to determine what will happen within the meetings about to occur. When starting your trading day take note of when events are planned, so you can check in on the prediction and see if it goes within your favor. Some events are more bull reactive than others, and the same goes for a bearish reaction. Always remember to use your stop losses in case the announcements go in the opposite direction as it is possible when trading off of fundamental announcements.
When trading from events (Ultimate Charting Software can provide examples), you have options to buy or sell when the market is reaching a new high or low off a percentage from historical trades from past announcements. That could enable a current trade to go in whatever direction the outcome of the event results.
In the end, you can choose whatever trading method is best for you. But pay mind to this handy tool that can save you from a dramatic change in direction or drop/rise in the market on your current trade. Every day there are multiple events to follow, with a range of impact on the market that can drive your goals!
Sources: investopedia.com, cmcmarkets.com