How the News Affects Your Trading

There is a lot of news affecting the markets. The news is an integral part of trading, and operations are conducted based on it because it provides excellent trading opportunities for those who trade CFDs, stocks, futures, and options. But what is this news? And what is meant by it? That’s what I’m going to discuss with you today.

The importance of news affecting trading

As you know, trading is a comprehensive process that can only be done by collecting all of its axes. You must plan your trading process, including the type of trading, method, and approach you will use. 

You must also plan your strategies and employ risk management techniques such as using a stop loss. This is critical if you do not have time to watch the transactions and follow some trading indicators that will assist you in the trading process.

The stock market and the currency exchange market tend to follow the economic trend, as they are affected by the economic situation, be it local or international. When I said that news is an integral part of the trading process, I meant this because influential news is what moves the markets in trading. The term “news” refers to releases and data from various economic and economic reports.

As a trader, it is critical that you keep up with the news and various economic events that affect the currency exchange and financial markets. This will allow you to distinguish what you should look for in terms of data related to your trading field. Knowing what these events mean will help you begin your trading process.

Source: Flickr

Which types of news could you follow?

1. The interest rate decision issued by the Central Banks

This factor is one of the most important news and economic data that traders should follow because it mainly affects the value of the currency. Various central banks from different economies of the world meet every month to decide interest rates, and the decision that they must take is either to leave interest rates as they are or to raise or lower them. 

The consequences of this decision, as we said, are very important for the currency of the economy and for traders as well.

An increase in interest rates is generally viewed as an escalation of any appreciation of the currency. On the other hand, a decrease in rates means a decline in any devaluation of the currency. If a decision is taken not to change prices, this will eventually lead to either an increase or a devaluation of the currency according to a perception then understanding of the economy.

The actual decision itself is crucial, and the accompanying policy statement of the central bank gives an overview of the economy and how they look to the future.

2. Gross Domestic Product (GDP)

Gross domestic product or it is called GDP is one of the most important indicators and economic events that traders should follow because it’s an important indicator of economic health. The central bank in each country predicts future growth for each year, which determines the speed of that country’s growth, and this is measured by the gross domestic product.

When GDP falls below market expectations, currencies depreciate, and when GDP exceeds expectations, currencies appreciate. As such, the issuance of that “Gross Domestic Product” number is carefully monitored by currency traders and used to carefully anticipate central bank moves.

3. Consumer Price Index (inflation data)

The consumer price index is the most widely used measure of inflation among all other economic indicators. This indicator provides information on the average prices that consumers pay for a group of commodities in the market, and it knows whether these commodities cost consumers.

Central banks monitor this release and economic event in order to help guide them to determine the interest rate and their policy. If inflation is clear and exceeds a specific target, then central banks raise the interest rate to deal with inflation.

4. The unemployment rate

The unemployment rate in any country is very important for the trading markets and for the rest of the markets. This is because central banks regard it as an indicator of the health of the economy. The rise in employment leads to a rise in the interest rate, as central banks seek to balance inflation with growth. As a result, the unemployment rate attracts the attention of many traders, traders, and investors in trading and other markets.

Besides the unemployment rate, there are other very important employment statistics. Some of the most important ones include the ADP, the US Employment Index for the private sector, and the NFP, which is the non-farm payrolls index. These statistics are released monthly.

5. The meeting of the Federal Open Market Committee

It goes without saying that central bank meetings are critical for all global economies. The meeting of the US Federal Open Market Committee, however, takes centre stage because the dollar is currently the world’s reserve currency.

The Federal Open Market Committee meets every month to set prices and give a statement on the current economic situation and the effectiveness of the current monetary policy. In addition, it looks at future expectations of economic conditions and monetary policy.

Traders looking for clues about how the central bank will act in the future closely examine the Federal Open Market Committee statement. Even the most illogical terms can cause significant market fluctuations.

The main key here behind all indicators, news, and economic reports is not only based on what the actual release means but also on how the market anticipates its release and interacts with it later. Trading opportunities for investors are created at this time. 

However, it can frequently become challenging for novice traders who want to engage in news trading. This is due to the fact that the volatility in this kind of trading can be debilitating to the capital. Therefore the most important news must be followed, and you can easily do this on the website of the trading portal provided by Tradeview here

All you have to do is focus closely on following up on economic events, reports, and releases that are related to your trading. Always search for information in the market, know everything related to prices, be careful and aware of the time of market volatility. 

You should also use appropriate economic indicators that will enable you to determine whether or not you will trade and when you will trade.

In addition to using the method of stopping loss and risk management in order to exercise caution and protect your capital and use the appropriate trading method for you. Take advantage of tools such as the economic calendar for your trading in order to have successful trading and achieve the profits you hope to achieve. 

Trading can be a risky activity, but by learning about it on a daily basis, following economic events, and using the right tools at the right time, you can become a successful trader and profit.

Access the latest news with Surf´s Up! and give trading a try by opening a Demo account. If you already have experience in trading open a Real Account with Tradeview Markets. 

For more information 

Mohamed Shraka 

Head Of Market Analysis EMEA at Tradeview Ltd

email: mshraka@tvmarkets.com 

LinkedIn: https://www.linkedin.com/in/mohamed-shraka-50777b61/