NEWS MAKES THE FOREX MARKET MOVE

This is not sufficient to only know technical analysis when you trade. It’s just as important to know what makes the FOREX market move.

Similar to the great Star Wars world, behind the trend lines, double tops, and head and shoulder patterns, there is a fundamental force behind these movements. This force is called the news!

To assess the importance of the news, imagine this scenario (purely fictional of course!)

Say, on your nightly news, there is a report that the biggest software company that you have stock with just filed bankruptcy.

Do you know what the first thing you would do? How would your perception of this company change? How do you think other people’s perceptions of this company would change?

 The reaction, that must come, would be that you would immediately sell off your shares. In fact, this is probably what just about everyone else who had any stake in that company would do.

The true is that news affects the way we perceive and act on our trading decisions. It’s no different when it comes to trading currencies.

However, a distinct difference with how news is handled in the stock market and the FOREX market is exist.

Let’s go back to our example above and imagine that you heard that same report of the big software company filing bankruptcy, but let’s say you heard the report a day before it was actually announced in the news.

Naturally you would sell off all your shares, and as a result of you hearing the news a day earlier, you would make (save) more money than everyone else who heard it on their nightly news.

Sounds good for you right? Unfortunately this little trick is called INSIDER TRADING, and it would have you thrown in jail.

Martha Stewart did it and now she has a nice mug-shot to go along with her magazine covers.

In the stock market, when you hear news before everyone else it is illegal. In the forex market, it’s called FAIR GAME!

The earlier you hear or see the news, the better it is for your trading, and there is absolutely no penalty for it!

Add on some technology and the power of instant communication, and what you have is the latest and greatest (or not so greatest) news at the tip of your fingers.

This is great… Uhmmm… “news” for retail traders because it allows U.S. to react fairly quickly to the market’s speculations.

Large traders, small traders, husky traders, or skinny traders all have to depend on the same news to make the market move because if there wasn’t any news, the market would hardly move at all!