Get to know the News Trading Strategy
Fundamental analysis is things that represent the economy of a country in general. Usually this analysis is represented by news (news) that repeats periodically and is able to move the market at that time. The influence of these fundamentals is generally temporary although sometimes it can affect the macro trend in the future.
In contrast to technical analysis that utilizes the "history" of price movements, in fundamental analysis traders will actually try to "catch" opportunities that might appear accompanying news or economic data related to certain countries which will certainly affect the currency of that country. By observing and studying these economic data, it is as if traders are trying to "peek" at the possibility of the next price movement.
One of the wrong assumptions about the News Trading strategy among traders is that this technique can only be done around the time of the release of economic data. Even though there are various types of News Trading strategies, and each trader can develop his own system in terms of determining exit and entry. The following are the various types of News Trading strategies:
Setting Traps On Two Sides Of The Market
Some traders place positions on both sides of the market before the release of important news using techniques similar to hedging. Here, traders open long and short positions on a Pending basis in the same currency pair before the release, but execution is only carried out after the news comes out. Traders may experience losses on the one hand, but are expected to get much larger profits on the other. There is a first variation, once the economic data figures are released, the trader will take profit from the first trading position. At the same time, traders allow the only position that has lost to float until the market returns to its normal path after the euphoria of the news release ends and the number of losses decreases. The second variation, the trader places a stop loss on both sides. As soon as the stop loss on one side is touched, the other winning position is left floating in order to get additional profit or liquidated as soon as possible, according to market conditions.
Long Term Trading
A number of academic studies suggest that the impact of a number of economic data releases could be prolonged. The period can be weekly or monthly, more than just one day at the time of the announcement. Some of the big and long impact data are the Non Farm Payroll and Federal Reserve interest rate decisions. Even though the market reacts spontaneously, the consequences of the interest rate mechanism and employment conditions will remain in the long term in various economic sectors. That is, using this data as the basis for a News Trading strategy in the long term is certainly possible. Traders who use this technique usually build their positions bit by bit based on less frequently released economic data, such as quarterly GDP. Traders also usually compile a compilation of updates and revisions of other important economic data related to the pairs they trade from time to time to determine whether the direction of price movement of a currency or pair in the future is bullish or bearish, then opens positions in the direction of the conclusion. . Details like this seem to be behind the success of some of the world's billionaires.
Short Term Trading
To execute a News Trading strategy with a profit target in the short term, the trader must have an idea of what kind of News can be traded. In addition, a trading system containing criteria for conditions under which entry and exit positions are placed also needs to be compiled. Traders also have to be really disciplined in applying the methods that have been made.
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