News trading is one of the most difficult tasks for the traders. Many novice Aussie traders have blown their account during the event of the major news release. Those who are completely new to this trading profession might not understand how this market works. But without understanding the complex price movement of the financial instrument it will be really tough for you to make a profit. There are few things which can drive the price of a certain asset. Among the news is considered to the most crucial price driving catalyst of the Forex market. Today we will learn how to trade the high impact news just like the expert traders.
The severity of the news
First of all, you have to understand the severity of the news. Every day hundreds of news are being released but not all of them are affecting the price movement of the currency market. As a Forex trader, you need to focus on the high impact news like NFP or interest rate decision. During such news release the long-term prevailing trend of the market can even get changed without any notice. On the other hand news like unemployment data, GDP also creates short-term market volatility. As a new investor, you must stay in the sideline line during such news release. First of all, try to understand the reaction of the market to this news.
Mark the key trading levels
Prior to the high impact news release, you have to mark the key points of the market. The novice traders always say they have done all the hard work yet they are losing money. To be honest they are just trading the market based on their technical data. They never really do any fundamental analysis. But if you do the fundamental analysis, you will notice the market is respecting the key levels. As a new investor, mark down all the potential trading spot. Never trade the market without having any precise spot. When you analyze the key support and resistance level, use the higher time frame chart.
Chart pattern trading
Chart pattern trading is one of the easiest ways to catch the large market movements. But the traders in the CFD trading industry often say when the market will breakout from its ranging rhythm. This is where you need to focus on the high impact news. Most of the time the major breakout of a certain chart pattern occurs during high impact news release. For instance, if you spot any head and shoulder chart pattern in any currency pair, you will be surprised to see price will trade near the neckline during the event of a major announcement. This clearly suggests the price is ready to go down and the news will act as a major catalyst.
Use of multiple time frame analysis
Multiple time frame analysis is another best way to trade the live assets. Once you understand the proper way to do the multiple time frame analysis, you feel a sudden change in you. To be honest you will be able to filter out the bad trades regardless of the conditions of the market. Things are not as easy as anew traders. When you study the different time frame data, focus on the higher time. Ask yourself whether you higher time frame setup is favoring the fundamental factors of the market. If YES take the trade if NO ignore the trade setup. Never trade the market without doing any perfect analysis.
Everything counts when it comes to news trading. You have to understand you are trading the most volatile conditions of the market. So if you take the risk to earn more money, you might lose a huge amount of money. Ask yourself whether you can truly deal with your emotions. Following proper money management and trading the market with discipline is the only way to become a successful trader.