Resolved Question
Can someone explain to me how news releases affect pair movements?
How does that work?
about 1 year ago
Best Answer - Chosen by Voters
Based on news releases a pair can move up or down. In my own experience, I have played both eur/usd and usd/cad and what I have noticed is that you really need to see what OTHER factors move the pair as well.
THEORETICALLY:
If News is POSITIVE - Currency which the news is positive about will STRENGTHEN. For example, in EUR/USD if the EURO news comes out positive, EUR/USD WILL MOVE UP (Theoretically). If news is negative, EUR/USD will come down. Vice versa as well, when USD news is positive, EUR/USD will come DOWN and when USD news is negative, EUR/USD will move UP.
OTHER FACTORS:
In my experience, there are rare times in EUR/USD pair that when news comes out in one direction, the market moves in opposite direction. It really depends on the STRENGTH of the news (So is it important news or not) and also what other market movers there are. For example, USD/CAD the canadian dollar is very VERY reliant on OIL so even if news comes out good for the Canadian dollar, if the oil prices ALSO suddenly go up, then the price for USD/CAD usually comes down. I've blown many an account by going through that. Aussie also works like Canadian dollar, but instead of oil, it is based on GOLD.
RECOMMENDATION TO LEARN NEWS TRADING:
1. Start with EUR/USD as that pair most of the time matches the theoretical news trade idea.
2. As you become stronger, (IF YOU WANT TO, many people just stick to eur/usd as it works so why change what aint broke?) you may want to try your hand on other pairs, but remember, each pair is its own beast. EUR/USD is amongst the easiest to trade
NOTE:
NEVER TRADE OVER A WEEKEND! Price could easily fluctuate up/down by 50-100 pips and you wont even be able to do anything to stop it! You could loose your account that way as well if news hits on weekend. Perfect example is G7/G8 meetings over a weekend, and suddenly prices soar, but because market is closed, you can't do anything, and all of a sudden when market opens, you're already in the hole by 50-100 pips and could loose your full account like that too! (Done that one before myself LOL)
about 1 year ago
Answers (2)
I agree with what abhiware stated. His reply is definitely well-explained. I also got some good points for my reference collection. Thanks to both of you, mates!
about 1 year ago
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Releases of economic reports could affect both short-term and long-term price movements. Some traders "trade the news" by either jumping on or fading the reaction to the report. Others look at these figures to forecast future trends for a particular pair. Remember that weak economic reports usually translate to a weak currency while strong economic figures mean a strong currency. To learn more about trading news releases, check out this link:
about 1 year ago
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