Finance & Loans
What you need to know about News Trading
October 30, 2011 by creative · Leave a Comment
If you are a Forex trader you would have come across the term “News Trading” where a trade is made immediately before or after the announcement of key economic data. Trades made at times like this can result in big profits or if not analyzed properly massive losses. So what are the pros and cons of News Trading?
Pros
The release of key economic data will see the country’s currency gain or lose hundred points within a few minutes, giving you the opportunity to make gains from the news. For example an announcement from the Federal Reserve Bank that the interest rate will be increased will see traders buying more dollars anticipating to make profits.
Cons
The market tends to be very volatile when lots of key economic data is being released. It is easy to lose lots of money unless you closely monitor the markets and very accurately read the information.
You could be “Locked Out” by your Forex broker, this is where you have made the order at the correct time but it has not been executed leaving you no time to make any amendments if the trend isgoing against you.
The volatility in the market will make you experience slippage.