When trading on the news, every Singapore Forex trader must follow certain steps in order to make his trading organized and profitable. There are 3 main stages that every trader must remember. Before you start trading you need to find out the exact time of the news release and what type of financial news it is.
The first stage. This stage takes place before the news release. We check where USD is moving during this time and read the analysts’ forecasts that are helping us approximately estimate what we can expect from the news and the market. For example, if you expect high inflation in the USA, it’s bad for the USD and it is likely to fall. In this case you will open a sale position. If the expectations are good for the USA we buy USD.
Second stage. The Second stage starts approximately half an hour before the news release. It is better to close the previously open positions or, in extreme cases, to put the stop-losses as the market might become very chaotic and unpredictable by this time. The Second stage in the Forex news trading is relevant in case if you have open positions before the news release, if not – go to the third stage.
If you think your nerves can not withstand the stress of the price movement against your position, you don’t have to trade at the moment, just watch the market and get moral satisfaction. Forex will be here tomorrow and a month later. But you should be ready for it. Meanwhile you can look at the Forex market’s movements and practice using a paper and your Forex demo account.
And finally, the third stage. This is the news release time and we are looking for the right moment to open a trading position. For example the news released show that the USA inflation is going to grow, and the markets stat moving. (EUR/USD is moving up and USD/JPY is moving down). Do not rush to enter the market during the first seconds or even minutes after the news release. Open your trading position if you think that the price will continue to move that direction. If the market keeps moving your direction and you are making profit, pull your stop-loss after the market, keeping in mind that there will be some corrections of the trend. Thus, you will not close your position too early and will make good profits.
Sounds simple, isn’t it? But this is an “ideal scenario”. The reality may be different. Often the market “shakes” a lot before it takes one direction and this is a very dangerous time for a Forex trader to enter the market.
Use this strategy very carefully and only after practicing on a demo account. Calculate the lot size, as well as your psychological situation. The Forex news trading strategy may give you high profits, but you must be careful and practice a lot. We wish you positive emotions and good market movements!