Forex markets are open 24/5 except on the weekends. You can see continuous price action all day in the currency markets. More than 90% of forex traders are speculators.
Forex markets have the tendency to react violently to the release of economic and socio political news. You cant predict when important sociopolitical event will be breaking news.
Fundamental news like NFP figures, the housing sales number, FOMC meeting etc all are released at a known time every month. You can Google fundamental news to find a lot of sites that provide this information.
You can get the day and time when a major economic announcement is going to be made. Non Form Payroll (NFP) figures have become very significant for USD pairs especially after the start of the recession recently.
NFP figures are released at 8:30 AM EST on the first Friday of each month. Currency pairs like EUR/USD become very violent just after the release of these figures. EUR/USD can shoot up sometime by 50-100 pips in 5-10 minutes.
Markets mostly stabilize within a few hours after the release of these figures unless these figures are of such a fundamental nature to form a new trend in the market.
Forex news trading is ideal for those traders who like a lot of action within few minutes. Here is one strategy that you can use.
Suppose you want to trade EUR/USD. Enter both buy and sell orders at 10 pips above and below the price of EUR/USD just a few minutes before the announcement of NFP figures.
Put stop loss of 10 pips and take profit of 40 pips on both orders. Immediately on the announcement of NFP figures, EUR/USD will react violently and either shoot up or down.
Suppose it goes up by 10 pips, buy order will be triggered. Suppose EUR/USD jumps by 60 pips. Your position will be closed at 50 pips when you have reached take profit of 40 pips. Isnt it nice you made 40 pips in a few minutes?
If EUR/USD goes down by 10 pips, the sell order will be triggered and you will still make 40 pips. However, sometimes the markets have a tendency to whipsaw. Practice this on your demo account first and make ten successful trades before going live.
If you would like to make a comment, please fill out the form below.
