In this era where information can be an extremely powerful and strategic asset, whether to individuals or corporations, and information equals money, especially for a trader, shutting yourself off from news could be suicidal. The forex market is extremely sensitive to the flow of news that is related 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 around the globe earn a living by processing and translating information into money. Financial news services providers understand how important news would be to the forex market players, and charge a premium for it. It isn’t uncommon to get a huge selection of headlines of news which are potentially relevant to Forex currency trading from any news company on an average trading day.
Traders, especially those who day trade the forex market, require the latest up-to-the-second news updates in order to facilitate their trading decisions which 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 latest financial news on their computer monitors. Because the speed of news dissemination is important 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 is of little use to traders.
The main reason why news is so important to Forex trading is that all new little bit of information could alter the trader?s perceptions of the existing and/or future situation associated with 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 the forex market. Using the news, these traders will be getting ready to cover their existing positions or 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 exactly the same news similarly that he or she has, and adopt exactly the same directional bias as the trader because of this.
News is an extremely important catalyst of short-term price movements due to the expected impact it is wearing other market players, which is in a way an anticipatory reaction for 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 US dollar, traders who react the fastest will undoubtedly be among the first to buy the us dollar, followed soon by other traders who may react slower to the news headlines or are looking forward to certain technical criteria to be met before jumping onto the bandwagon. And there will be those who interact the buying frenzy at a later stage if they get hold of the delayed news in the morning newspapers or from their brokers. This progressive entry folks dollar bulls over a period is what sustains the upward move of the US dollar against another currency, with the USD exchange rate going higher against other currencies. The reverse holds true for bearish news, traders will sell because they know that others will soon be selling, thus pushing the USD exchange rate down. That is using the assumption that since other traders will undoubtedly be getting the same bits of news, they will be also are usually affected exactly the same way.
Publicly released news is disseminated to the various newswires. Any trader with usage of these wires can tap into the information provided, and react accordingly in forex. However, institutional players do get information that retail traders don?t, as they get privy usage of order book information in their computer systems, and could also know a thing that others don?t through their personal contacts in the industry.
In the wonderful world of Forex trading, you can find no rules or restrictions against insider trading! Anyone who possesses information that is known only to a select few can and do trade that information in the forex market. Sometimes, Limited can provide 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.
Your voice is among the most powerful tools you possess and utilizing the media is an excellent way to get your voice heard. The most profitable and often overlooked free publicity generator may be the news release. A news release is a brief written summary alerting the local media about your business news and activities. News releases aren’t only great marketing tools but also a lot more credible and believable than advertising given that they appear to result from an objective alternative party.