The largest known financial market in the world is the Forex market where trillions of dollars are traded every day. It not only offers tremendous opportunities for long term traders but also offer many opportunities for short term traders. It is important to pay attention to these short term fluctuations caused in the Forex world, XFR Financial Ltd says, as these fluctuations may arise due to Forex News.
What is the effect of Forex News?
The Forex market is very reactive to the economical changes and economic announcements. For example when Federal Reserve decided not taper off their quantitative easy program, the dollar crashed recently. The signals of U.S. economy gone on support sent traders to hold positions on other currencies like GBP where the signals were strong. This is really a very fast reaction from the Forex news because the announcement was trailed for weeks but the response in the Forex market was an immediate conclusion.
These types of fluctuations in the Forex market are no uncommon and market reacts very fast on the Forex related news and if it has a less effect sometimes, then also it will be significant over time. There are not less than seven announcements daily related to Forex news and to the major currencies. It is important to understand which one to pay attention and choose which one to decide as a major factor for trade. The most important announcements are coming from the governments and the big banks. The most common big news comes from the U.S. as the most of the currency trades are related to U.S. dollars. The announcements in U.K. are also important as the London is a great center of Forex trading in the world.
According to a study XFR Financial Ltd had, the market effect of an announcement lasts anywhere in between 2 to 4 days but there can be ups and downs too. There may be some great movements just after the Forex news is heard but later it goes more evident over longer periods.
Trading at XFR Financial Ltd on the basis of news
This is known as a fundamental speed strategy to trade on news. It is also referred as a duck and jab approach in FX trading. It contradicts the longer vision strategy where many other factors are considered over a long term. The tricky thing is to look for the consolidation periods- short term fluctuations just happening after the announcements. Then trade on the breakout when the currency movement is beyond the usual trading range.
Although short term trade offers a lot of opportunity to make money in short period over at XFR Financial Ltd but it is really desired to be wise and maintain a disciplined approach. To minimize the risks associated with short term trading it is better to consider using stop orders. Stop orders are only executed if currency pairs reach a certain level and the payment is made. If it is not reached to the level within specified time, the order fails. Stop orders are useful if you can’t react real time and when announcements fall out of your trading schedule.