Forex News Sentiment – Pre News Trading
The forex market as well as other markets are all futures driven markets. What is meant by a futures market? In short, traders are always looking to determine where the price is going to be in the future, or in this case what the value of a certain countries currency is going to be in the future. This is the principal behind pre news forex trading strategies, using sentiment. Every week and in fact most every day there is some high impact news being release for at least one country. These news releases can determine the direction of a certain currency pair for a few hours to a few days or longer. In addition to this and more specific to sentiment trading is the pre release market move created by the economic data, thus sentiment trading is born.
Let’s use an example to better define and therefore illustrate sentiment trading economic news releases. As an example let’s say there is going to be an interest rate decision out of the Bank of England. Coming into this rate decision there have been many positive news releases out of Great Brittan. In addition to this there have been economic articles reporting pressure to raise rates on the bank of England. Reflecting on these thoughts and the fact that there is really no possibility for a rate cut, more often than not you will see the GBP/USD climb in anticipation of the pending rate decision. It’s really as simple as asking yourself one question before some form of economic data is released, “If I had to be in the market at the time of this news, what position would I want to be in.†If there is a strong case for one direction that is clearly evident you will often see the price move that way BEFORE the economic data is released. Remember what was mentioned in the first paragraph, this is a futures market and the market will try to “price in†or predict the direction before the actually have the data. This is just one specific example and the principal behind this example can be used successfully with any high impact news release and with any currency pair.
As you probably gathered from the example just mentioned there is a certain amount of research that is required to trade news sentiment in the forex market. Fortunately every news trade is scheduled weeks in advance which allows time to research a current countries economic condition as well as what economists are expecting. This is quite simply a tool in the tool chest. When we combine sentiment, support and resistance, exponential moving averages, chart patterns in our live trading room the pieces start to fall together. No one system is an end all that will work for years to come, and if you have been successful in this market for any length of time you know that. For this reason we strive to stay ahead of the market and use our many “tools” to remain profitable in ANY market condition. Come learn some new techniques such as sentiment trading that you can use to day trade and swing trade in the forex. Although many of our strategies are designed for short term trading in the forex market as just mentioned, they can be used across a broad range of timeframes, even for position trading as well as other markets from stocks to metals and everything in between.