Forex News Straddling Strategy (Part I)
Major short term currency moves are almost always preceded by changes in fundamental views influenced by the news. Traders around the world make a living by processing and translating information into money. The forex market is extremely sensitive to the flow of news related to it.
We live in the information age. It is an era where information can be an extremely powerful strategic asset. Information equals money especially to a trader. Shutting yourself off to the news can be suicidal. Timely information is vital to an individual or a corporation.
The speed of the news dissemination is very important to traders. If you receive the news after some delay, it is almost of no use to you. Others have already taken advantage of it. Traders especially the day traders require the latest up to the second news updates. Latest news facilitates their trading decisions which have to be made at the lightening speed. A 15 minutes delay in receiving the news can mean losing the trade.
Online news services display the latest financial and economic news on their computer monitors. Many opt for instant online news services such as the Dow Jones Newswires, Bloomberg and Reuters.
News is important to forex trading. Each new piece of information can potentially alter the traders perception of the current or future situation relating to the outlook of certain currency pairs.
News that is of great importance to forex traders is generally related to a countrys economic, monetary and political situations and socio-political events that are happening around the world like in Middle East and North Korea.
A traders action is based on the expectation that there will be follow through in prices when other traders see and interpret the same news in a similar fashion and adopt the same directional bias as the trader as a result. These traders will be preparing to cover their existing positions or initiate new positions based on this news.
This is in a way an anticipatory reaction on the part of the trader as he or she assumes that the other traders will be affected by the news as well. Because of the expected impact it has on other market players, news is a very important catalyst of short term price movements.
Suppose the news item happens to be bullish for the US Dollar. Traders who reacts the fastest will be the first to buy US Dollar. They are anticipating an uptrend in US Dollar. They will be followed soon by other traders. Other traders may be slower. They maybe were waiting for some technical criteria to be met before they jump on the bandwagon. However, all of them anticipate an uptrend to develop.
When they get hold of the delayed news in the morning newspapers or from their brokers, there will be many who will join in the frenzy at a later stage. This progressive entry of the US Dollar bulls over time is what sustains the upward move of USD against another currency.
The reverse will happen on the surprise bearish USD news. Instantly traders will start selling USD on the assumption that when other traders will hear the news, they will also start selling. - 23159
We live in the information age. It is an era where information can be an extremely powerful strategic asset. Information equals money especially to a trader. Shutting yourself off to the news can be suicidal. Timely information is vital to an individual or a corporation.
The speed of the news dissemination is very important to traders. If you receive the news after some delay, it is almost of no use to you. Others have already taken advantage of it. Traders especially the day traders require the latest up to the second news updates. Latest news facilitates their trading decisions which have to be made at the lightening speed. A 15 minutes delay in receiving the news can mean losing the trade.
Online news services display the latest financial and economic news on their computer monitors. Many opt for instant online news services such as the Dow Jones Newswires, Bloomberg and Reuters.
News is important to forex trading. Each new piece of information can potentially alter the traders perception of the current or future situation relating to the outlook of certain currency pairs.
News that is of great importance to forex traders is generally related to a countrys economic, monetary and political situations and socio-political events that are happening around the world like in Middle East and North Korea.
A traders action is based on the expectation that there will be follow through in prices when other traders see and interpret the same news in a similar fashion and adopt the same directional bias as the trader as a result. These traders will be preparing to cover their existing positions or initiate new positions based on this news.
This is in a way an anticipatory reaction on the part of the trader as he or she assumes that the other traders will be affected by the news as well. Because of the expected impact it has on other market players, news is a very important catalyst of short term price movements.
Suppose the news item happens to be bullish for the US Dollar. Traders who reacts the fastest will be the first to buy US Dollar. They are anticipating an uptrend in US Dollar. They will be followed soon by other traders. Other traders may be slower. They maybe were waiting for some technical criteria to be met before they jump on the bandwagon. However, all of them anticipate an uptrend to develop.
When they get hold of the delayed news in the morning newspapers or from their brokers, there will be many who will join in the frenzy at a later stage. This progressive entry of the US Dollar bulls over time is what sustains the upward move of USD against another currency.
The reverse will happen on the surprise bearish USD news. Instantly traders will start selling USD on the assumption that when other traders will hear the news, they will also start selling. - 23159
About the Author:
Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Try Netpicks Forex Signals Free. Learn Forex Trading!
posted by X - Men @ 3:19 AM
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