Forex Market News
Forex market news offer many opportunities almost every day.The main question related to forex market trading when news are released is what to really do.Today there were news about US retail sales for July and the result was much worse than anticipated.So the US dollar initially lost ground.Later on there was the University of Michigan confidence which was again below expectations.However the US dollar managed to appreciate against several other currency pairs.
Forex market trading around news strategy
There is a lot of volatility at forex market when fundamental news are released.And there are mainly only 2 simple strategies about forex trading.Trade either before of after the news.Which one is the best strategy overall?Which strategy offers best risk reward ratio and minimizes risk?The answer is not so simple.It would be great if it was easy but you cannot make money trading any financial market without taking risk.
A prudent and more conservative option is to trade after the news.And if you have any substantial profit before the release of the news then close the position.Close the position?Why?
It is simple.You book the profits.Until you press the button and close any trade any profit or loss is not realized.One of the most annoying things that can really have a negative effect to your trading psychology is when a profit suddenly turns to a loss.This is often.It happens,guess when,around news releases.
What about waiting patiently to trade after the news are made known to the public?This is a good strategy but has one major drawback.This is that immediately when news are published there is a strong move for a currency pair and you miss the main opportunity.Now you can wait for a pullback or decide to trade in another day.This is fine.Do not chase any trade and break your risk management rules.Opportunities come and go.Be wise with your trading capital and money.