In this era where information is definitely an extremely powerful and strategic asset, whether to individuals or corporations, and information equals money, specifically for a trader, shutting yourself off from news could be suicidal. Forex is extremely sensitive to the flow of news that’s linked to it, and major short-term currency moves are almost always preceded by changes in fundamental views influenced by the news headlines Lambert Philipp Heinrich Kindt. Traders all over the world make a living by processing and translating information into money. Financial news services providers understand how important news is to forex players, and charge reduced for it. It is not uncommon to get hundreds of headlines of news which are potentially relevant to Forex trading from any news company on the average trading day.
Traders, especially those that day trade the forex market, require the most recent up-to-the-second news updates so as to facilitate their trading decisions that have to be produced at lightning speed. They mostly make full use of online financial newswire services such as for example Dow Jones Newswires, Bloomberg and Reuters, which display the most recent financial news on their computer monitors. Because the speed of news dissemination is vital to traders, many choose these online instant news services rather than based on daily newspapers just like the Wall Street Journal or the Financial Times which carry stale news that’s of little use to traders.
Exactly why news is so important to Forex trading is that all new piece of information could alter the trader?s perceptions of the existing and/or future situation relating to the outlook of certain currency pairs. When people?s opinions or beliefs are changed, they have a tendency to act on these changed perceptions through selling or buying actions in forex. Using the news, these traders will undoubtedly be preparing to cover their existing positions or even to initiate new positions. A trader?s action is founded on the expectation that there will be a follow-through in prices when other traders see and interpret the same news similarly that he or she has, and adopt the same directional bias because the trader therefore.
News is a very important catalyst of short-term price movements because of the expected impact it has on other market players, and this is in a way an anticipatory reaction on the part of the trader as she or he assumes that other traders will undoubtedly be affected by the news as well.
If the news happens to be bullish, say for the united states dollar, traders who react the fastest will undoubtedly be among the first to buy the united states dollar, followed soon by other traders who may react slower to the news or are waiting for certain technical criteria to be met before jumping onto the bandwagon. And you will have those who interact the buying frenzy at a later stage when they get hold of the delayed news each morning newspapers or from their brokers. This progressive entry folks dollar bulls over a period is what sustains the upward move of the united states dollar against another currency, with the USD exchange rate going higher against other currencies. The reverse is true for bearish news, traders will sell since they know that others will be selling, thus pushing the USD exchange rate down. This is in line with the assumption that since other traders will undoubtedly be getting the same bits of news, they will be also tend to be affected the same way.
Publicly released news is disseminated to the various newswires. Any trader with access to these wires can tap into the information given out, and react accordingly in forex. However, institutional players do get information that retail traders don?t, as they get privy access to order book information in their computer systems, and may also know something that others don?t through their personal contacts in the market.
In the world of Forex trading, there are no rules or restrictions against insider trading! Anyone who possesses information that’s known only to a select few can and do trade that information in forex. Sometimes, such news may give an unfair advantage to these institutional players, but at other times, this isolated news access may not result in real market action if other players don’t have that information.
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