There are many important things you need to know to trade and invest successfully in the stock market or any other market. It seldom has immediate reaction in the market and a trader might just as well take a technical trade without bothering himself about fundamental data. When a friend of mine told me about Forex 6 years ago I was very inspired and got into the market after trading Forex demo account for a couple of months. As I outlined in the Economic calendar I expected economic news from Great Britain to cause important moves in pound pairs.
Trading Forex seemed so exciting that I pulled all my money out of Lithuania Stock Exchange and sent it to an American Forex retailer. I could say that I knew what I was going to do. As I watched price action in Forex market I saw lots of movements around financial news events. And then waited… 2 minutes before the news the price moved down and my sell order was opened and then when the news came it moved up so fast that my Forex broker was not able to close my sell order and open my buy order.
But this taught me a lesson to be more carefull while trading economic news releases, limit risk and think of some alterntive strategies in trading Forex. From the technical point of view there could have been other possibilities, but since the article is about economic news trading I am not going to expand on other trading systems. There wasn’t any significant economic or forex news on Monday that would cause bigger moves in currency pairs.
When the report came out gbp/usd rallied and you would have easily made around 50 pips if you traded the news release. This piece of forex news caused Canadian dollar to collapse across the board causing a reversal even in usd/cad, which was going down the week before. All of the events could have been traded profitably using economic news trading strategy.
Though i trade on news sometimes but no forex trader should stand out to say that fundamental is best in forex trading. Other forms of news that usually impacts stock markets are: crude oil prices, inflation, unemployment, government policies, political unrest, bonus dividends and stock buy backs, inclusion or exclusion from indexes, change or death of top officials, changes in demand and supply and terrorist attacks amongst other factors.