The simple answer to that question is To make more money!
But in all seriousness, as we learned in the previous section, the news is a very important part of the forex market because it has the potential to make it move!
When news comes out, especially important news that everyone is watching, you can almost expect to see some major movement.
Your goal as a forex trader is to get on the right side of the move, but the fact that you know the market will most likely move somewhere makes it an opportunity definitely worth looking at.
As with any trading strategy, there are always possible dangers that you should be aware of.
Because the forex market is very volatile during important news events,many forex brokers WIDEN the spread during these times.
This increases trading costs and could hurt your bottom line.
You could also get locked out which means that your trade could be executed at the right time but may not show up in your trading station for a few minutes.
This is bad for you because you wont be able to make any adjustments if the trade moves against you!
Imagine thinking you didnt get triggered, so you try to enter at market then you realize that your original order got triggered!
Slippage occurs when you wish to enter the market at a certain price, but due to the extreme volatility during these events, you actually get filled at a far different price.
Big market moves made by news events often dont move in one direction.
Often times the market may start off flying in one direction, only to be whipsawed back in the other direction.
Trying to find the right direction can sometimes be a headache!
Profitable as it may be, trading the news isnt as easy as beatingPipcrawlerat Call of Duty. It will take tons of practice, practice and you guessed it more practice!
Most importantly, you mustALWAYShave a plan in place. In the following lessons, well give you some tips on how to trade news reports.
Do you feel overwhelmed by all this margin jargon? Check out our lessons onmarginin ourMargin 101 coursethat breaks it all done nice and gently for you.
How to Pick Tops and Bottoms With the COT Report
How to Trade the News With a Directional Bias
How to Trade the News Using the Straddle Trade Strategy
Know When Carry Trades Work and When They Dont
Laziness is a secret ingredient that goes into failure. But its only kept a secret from the person who fails.Robert Half
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