If you are reading a fundamental article or a news it seems like ” Actual’ greater than ‘Forecast’ is good for currency or Actual’ less than ‘Forecast’ is good for currency ” Do you think it is always as simple as it sounds? I don’t think so. There is n number of things that you need to know to trade a news successfully. Let me help you to figure out the things that are important to trade a news.
So what is the right time to trade a news?
Here we should mention one important thing: the market sentiment has been made before the news release. Reading something like “If the data improves, the currency will be appreciated”, then you can think that waiting until the news is over and the situation is open. However, this can be a big mistake. One day before the release is worth opening a position.
Let me explain you the logic behind it. You know that the market is built from billions of traders. They trade to buy or sell a currency pair. They make the investment or get out from the current opening. The final goal of all traders is to buy at the cheapest price and sell at the highest price.
In simple terms, If everyone expects a good news release in the USD. They will buy the USD before the release when it is at the cheap price and hoping to sell at the high price after the news event over.
So what are you planning to do?
Here is your solution: You need to pay attention to the fundamental analysis. If we are talking about economic data, You should check the economic data calendar and look at the forecast, If you see the forecast is less than the previous data consider selling the currency and Vice versa, in case of the positive forecast.
Now you need to check on technical parameter about the confirmation of the trend. Check H1 timeframes and see whether there is any short downtrend with respect to the economic forecast listed in the calendar. If such a trend exists, you can sell trade the currency and cook the opportunity of ahead of the actual event. In this way, you can trade with respect to market sentiments.
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