News Straddling (Part I)

The forex market is extremely sensitive to the flow of news related to it. Traders around the world make a living by processing and translating information into money. The forex market is extremely sensitive to the flow of news related to it. Major short tern currency moves are almost always preceded by changes in fundamental views influenced by the news. Get these forex training secrets.

In an era where information can be extremely powerful and strategic asset, whether to individual or corporation and information equals money especially to a trader, shutting yourself off to the news can be suicidal.Understand these forex broker games.

The speed of the news dissemination is very important to traders. Traders especially the day traders require the latest up to the second news updates. This facilitates their trading decisions which have to be made at the lightening speed.

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Many opt for instant online news services such as the Dow Jones Newswires, Bloomberg and Reuters which display the latest financial and economic news on their computer monitors.

News is important to forex trading because each new piece of information can potentially alter the trader’s perception of the current or future situation relating to the outlook of certain currency pairs.

News that is of great importance to forex traders is generally related to a country’s economic, monetary and political situations. Socio-political events that are happening around the world like in Middle East and North Korea also tend to affect the forex market in major ways.

Based on this news, these traders will be preparing to cover their existing positions or initiate new positions. A trader’s action is based on the expectation that there will be follow through in prices when other traders see and interpret the same news in a similar fashion and adopt the same directional bias as the trader as a result.

News is a very important catalyst of short term price movements because of the expected impact it has on other market players. This is in a way an anticipatory reaction on the part of the trader as he or she assumes that the other traders will be affected by the news as well.

If the news happens to be bullish for the USD, traders who reacts the fastest will be the first to buy USD followed soon by other traders. Other traders may be slower. They maybe were waiting for some technical criteria to be met before they jump on the bandwagon.

When they get hold of the delayed news in the morning newspapers or from their brokers, there will be many who will join in the frenzy at a later stage. This progressive entry of the US Dollar bulls over time is what sustains the upward move of USD against another currency.

Almost the reverse will happen on the surprise bearish US Dollar news. Traders who get the news first will start selling US Dollar instantly on the assumption that when other traders will hear the news, they will also start selling.

News Straddling (Part I)

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