Trading the news is often difficult and not be suitable for everyone, trading on news the volatility that follows can create lots of trading opportunities.
Why trade the trading on news When news comes out, especially important news that everyone is watching, you can almost expect to see some major movement. The fact that you know the market will most likely move somewhere makes it an opportunity definitely worth looking at.
Your goal then, as a news trader, is to get on the correct side of the move. The Dangers of Trading the News As with any trading strategy, there are always possible dangers that you should be aware of.
Here are some of those dangers: Spreads Widen 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. 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.
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!
It will take tons of practice, practice and you guessed it… more practice!
Do you feel overwhelmed by all this margin jargon?