The currency market is particularly sensitive to market news, such as the non-farm payroll data announcement. Volatility during these periods of news announcements is notoriously high, and fortunes are literally made and lost in a short time span of a few minutes.
With these characteristics, it’s no wonder that many retail Forex traders pay extra attention to the latest daily news updates… their trading account depends on it!
Who Are News Traders?
News traders are people who trade exclusively on economic news announcements. Their aim is to make the most profit in the shortest time possible. It’s not unusual to have a market movement of a hundred pips of more, just 5 minutes after the news is announced.
News trading is a highly risky style of Forex trading, and is generally not recommended for novice traders. Amateurs who think news trading is a way to make easy money are often taught an expensive lesson by the market.
What If I Don’t Want To Trade The News?
For those who do not wish to trade the news, they often wonder if they should pay attention to the daily market news at all.
In my humble opinion, the answer is generally ‘no’.
The fundamental daily news is usually slowly incorporated into the market price, so a competent technical trader will already be able to take into account any unusual changes in price action.
However, there are of course exceptions to this rule of thumb.
While you probably don’t need to pay a lot of attention to the every-day news announcements, there are some economic news data release dates that you should avoid trading in.
These are the same economic news announcements that the news traders trade on. Some examples include the non-farm payroll, ISM manufacturing and FOMC meeting announcements.
The high price volatility experienced during these periods are best avoided by most traders… it’s better to keep your capital protected than to risk it on highly risky trades.
