News trading is the substitute of technical analysis. Trading the news is mostly speculating the price movements via fundamentals and events.
Fundamentalists place their orders before or after an event takes place to identify bullish or bearish formations.
News traders, therefore, wait for big or medium impact events to decide whether to place a buy or a sell order.
Usually, and most of the times, during big announcements the FX pairs perform extremely aggressive oscillations that could either bring enormous profits or losses.
Speculate the markets with news trading
Both ways or styles are unique and involve a solely different approach. Sometimes, though, traders combine the two.
Therefore, when both styles are used, technical analysis is helpful in identifying the entry and exit points, whereas fundamentals help the forex traders to spot the volatility or direction of the market.
If you have made the decision to be a news trader, or you will be implementing both news and technical analysis, you should follow this approach at all times.
Changing your plan every so often, from news to technical, or confusing the two, could lead to negative results and misinterpretation of your approach.
Furthermore, some of the major events that generate, on a regular basis, aggressive movements are the FOMC meeting minutes announcements, the Central Bank’s rate decision releases, the Gross Domestic Product releases, the CPI (inflation) data, and the unemployment rate. The non-farm payrolls and Mario Draghi’s speeches have also a major influence or impact on markets.
Moreover, as a fundamentalist, you should proact to the events and execute your orders with speed, before and after the announcements. The macroeconomic criteria are the parameters that influence the markets the most. Momentum, volatility and price action are the outcomes of the news or announcements.
Are you a fundamentalist? Study the events well and let your trading activity flow!