News trading is hugely profitable, but only a few traders can use the news data. The market becomes extremely volatile during the high impact news release, and the novice traders find it hard to trade in such a volatile condition. But if you can learn the fundamental analysis then you can easily interpret the market news and trade high-quality trades. Majority of the retail traders execute their orders based on their technical analysis skills. But you need to understand that to find the best trading signal you need to learn about the fundamental section also. It will help you to measure the strength of the market trend and maximize your profit potential. But make sure that you are not using your real money to learn news trading. Just open a demo trading account and see how this market reacts to a different news release.
Fundamental factors are price driving catalyst
This market extremely volatile without learning about the technical and fundamental analysis you can never really execute high-quality trades. Some traders at Saxo often consider the news as the prime price driving catalyst in the Forex market. For instance, if you see a sharp drop in the USDJPY pair all of sudden the chances are very high that a high impact news data is hugely negative for the U.S economy. To be precise, the market is extremely sensitive to economic and political events.
How do learn fundamental analysis?
Developing your fundamental analysis skill is very hard. In fact, many traders in the online market often say that they don’t understand how the market reacts to a different news release. But if you spend some quality time and learn about the impact of different news release then it won’t take much time to master the art of news trading. But before you learn about fundamental analysis make sure that you have the perfect sets of technical skills to find the best quality trade setups in your trading platform. Fundamental analysis is the second section of your Forex learning course. If you have a weakness with your technical analysis section, then you need to start it from scratch.
Interest rate decision
The change in the interest rate of a particular country can significantly alter the monetary value of the certain financial asset. For instance, if the FED hike their interest rate all of sudden in the FOMC meeting minute then we are most likely to experience an extreme bullish surge in the U.S dollar index. The U.S dollar index is the overall value of the green buck’s strength against the six major currency pairs and many traders often consider it the best indicator to monitor the power of green bucks.
News can also have a great impact on the commodity market. For instance, there are many traders who are trading the oil and making a decent amount of money. All of sudden the OPEC has declared that there will be no cap in the production of oil. Can you imagine what will happen to energy industry? Within a fraction of a second, the price of oil will fall from the sky. If the supply of oil exceeds the current demand of the consumer then the market experience an extreme level of bearish pressure. Even political threats and a major announcement from the leading political leaders significantly influence the price movement of the financial asset.
Some of you might be thinking that it’s nearly impossible to monitor all these news. But if you are smart then you should probably consider how the expert is using the news data. Instead of looking at every single news you need to find which news is relevant to your trading asset. Based on that you should decide whether you will keep your position open or let it run to maximize your profit. If you devote yourself, then it’s just a matter of time to understand the financial news.
