Trading based on news: turning information into profit
The news trading strategy is quite interesting. The economic calendar publishes events that may have an impact on an asset, and a trade is concluded based on the outcomes of those events. However, there are a few nuances worth nothing.
Knowing when the statistics will be released allows the trader to devise a trading strategy for UP/DOWN trades with assets that will be impacted by this information. It is worthwhile to use information leads, data that does not always meet expectations, for the trading on news strategy. For example, data on the United States periodically show discrepancies with analyst opinions, causing the price to move UP or DOWN. The driver of price growth/decline is a discrepancy in data. The trader enters the market after the macroeconomic figures are released. This option is advantageous because you are already aware of how the published data correlates with forecasts and previous values.
The news trading strategy is applicable to all assets without exception. Every day, the calendar of events publishes statistics from various countries.
Example of trading on the news
Select the “Economic calendar.” The calendar is updated in real time.
Look at how much time there is before the news release and choose the most convenient time for our trade.
For example, let's take the first one: Retail Sales (MoM) (May)
We read the description of the indicator. Understanding this is necessary for further analysis and forecasting when making a trade.
We select a currency pair with which to close the trade. This table shows the currency pairs whose prices may rise or fall as a result of the publication of this economic news event. We are confident that at least one of these assets will be useful to us.
Let's look at the values in the “Previous (value)” and “Forecast” fields. Before the news release, the “Actual” field remains empty. These are the values that are we consider when analyzing the news. It is the numbers displayed in these fields that the trader should pay attention to first of all.
Shortly before the news release, we select the most profitable asset (or more than one) of those that the news impacts to conclude the trade with.
We make our trade based on an analysis (comparison and conclusion) of data from the "Previous" and "Forecast" fields on the selected asset shortly before the news release, or data from the "Actual" field during or immediately after the news release.
In this case, the news was "processed" for nearly 10 minutes, allowing us to open profitable trades on an uptrend: