Forex News Trading System – 3 Cautions Related to Any System Based on Trading Forex News

When it comes to forex trading, a news-based strategy can be highly lucrative. However, it’s also one of the most risky approaches due to the explosive market movements that can occur during fundamental announcements. If you’re thinking of delving into this strategy, make sure to keep in mind these three key considerations.

1. A Strong Account Protection Strategy – One of the greatest risks when trading forex news is that you can’t predict which direction the market will move. As such, it’s essential to have a strong account protection strategy in place in case the market goes against your anticipated direction. Without it, your entire account could be at risk.

2. Realistic Profit Targets – The forex market’s reactions to fundamental news largely depend on traders’ expectations. For example, if the consensus is that unemployment will be at 8% for the next Non-Farm Payrolls announcement, but it actually turns out to be 7.9%, the market could interpret this as positive news for the US economy, and the dollar could strengthen. How much it will move will depend on how much better the actual result is from traders’ expectations. It’s crucial to have a realistic profit target in mind based on the news results.

3. A Cooperative Broker – Your forex news trading system won’t work if your broker doesn’t allow you to trade live prices during fundamental announcements. During highly volatile announcements, some brokers may delay currency pair prices, as they discourage news-based trading. If your broker acts in this way, you may need to choose a new one or reconsider trading forex news.

By Rahul G.

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