Saxo Forex Markets

Creating a News Trading Strategy in a Few Easy Steps

May 20, 2020, 10:27AM
3 min, 10 sec READ
Brought to you by Saxo Markets

Economic news holds the power to drive the price of a certain asset to an extreme point. It can even cause a major shift in the trend.

Those who are good at analyzing the market dynamics are always taking the trades with managed risk. They never risk too much money even though they are good at following the basic protocols. As a currency trader, you might see that the top traders in Hong Kong are making a decent profit by taking advantage of the major news. But news trading is not as easy as it seems. A robust trading system is required to trade the news. Let’s explore some amazing techniques we can use to create a perfect news trading system.

Know the impact of news

Before you start developing a news trading method, you have to know the impact of economic news. Some news has a low impact and some has a very high impact. You must be able to identify high and low impact news. Rookies might think it is a very complicated task but this can be easily done by using an economic calendar. If you get access to an economic calendar, you will know the schedule of the high impact news. This will boost the profit potential and allow you to execute high-quality trades with an extreme level of accuracy. Once you become good at analyzing the data, you can easily change your life without taking too much risk.

Blending the news data

Professional traders blend the news data with the technical analysis to find potential trade setups. When the news analysis becomes a little bit complicated, you should not trade the Forex market. Remember, trading is not about random trade execution. You have to know the proper way to find the perfect trade with low risk. Once you become good at analyzing the major news, try to relate it with the technical data. If things seem complicated, you should not take the trade. Always follow the standard protocols of trading and you will be able to make some serious profit form this market.

Use the price action signals

To trade the major news, you can use the price action signals. Draw the support and resistance level in the higher time frame. Once the news is released, you need to look for the reliable price action signal in the minute time frame. If you spot any price action signal that favors the news take the trade. Though it is a very powerful way to execute the trade, you must learn to trade with low risk. The maximum risk you should take per trade is 2% of your account balance.

Stick to the trend trading method

You must stick to the trend trading method to ensure the safety of your trading capital. By breaking the rules, you pose a great threat to your trading business. The rookies can make some serious profit since they know the proper way to execute the trade. They never break the rules because they follow all the basic protocols. Some of you might know the way to trade the reversal but it is only designed for professional traders.

Practice in the demo account

By now you know all the basic details of how you can find the best possible trades in the market. Being a new trader, you should test your new trading model in the virtual account. If you feel comfortable with your demo trading performance, you have the green light to trade with real money. Demo trading might seem boring but it is the only way you can ensure consistency at trading. Never become biased with the aggressive trading method. Stop purchasing an expensive system from unregulated sites. Use your knowledge and follow the tips in this article to create a perfect news trading system.

Disclaimer: information contained herein is provided without considering your personal circumstances, therefore should not be construed as financial advice, investment recommendation or an offer of, or solicitation for, any transactions in cryptocurrencies.