October 23, 2013

Forex News that Causes Currency Changes

This article looks at the forex news that causes changes in the forex market.

Forex News and Forex Rates

There are a lot of traders who look at forex news as their primary analysis method for the forex market.  There is a lot of forex news that you can consider when you are trading.  Some of the news will have a larger impact on the market and the value of the currency than others.  It is important that you know about the forex news that can cause changes in the currency.  You also need to know about how you can predict when these changes are going to come.

The Impact Level of Forex News

One of the best ways to determine how much change the forex news will bring is to look at the impact level of the news.  There are three levels of impact that you have to know about and they are the high, medium and low levels.  The high impact news will generally have a major impact on the value of the currency.  This is due to the high impact news being the fundamental economic news of the country.  The low impact news will have a very limited affect on the market if there is any effect at all.  This news is generally the smaller day-to-day news that comes from a country.

The Frequency of the News

When you trade with forex news you need to know how frequently the news will be released.  When you are looking at the high impact news you are going to see that it is not released that often.  There are some high impact reports that are released once a month.  Others are released once a quarter and others are released less often.

The lower the impact of the news the more often you will see this.  However, the low impact news can be once off events that you will not see again.  You have to consider this when you are looking at the forex news.

Non-Economic News

There are some traders who think that forex news is only the news that is related to the economy of the country.  This is not true as fundamental analysis which is based on forex news will look at the economic and political news of the country.  The political news of a country can impact the stability of the country and the economy.  One of the major political events that affect the forex markets is the elections within the country.  Any policies that governments put through will also have an impact on the forex market.

Analysing the News

It is important that you know how to analyse the news that you are able to get.  A common mistake that traders make is to take a news event in isolation.  This means that they are only going to be looking at the upcoming new event only and not at the relationship that it has with other news events.  This will actually lead to a distorted view of the market and it could lead to an incorrect analysis.

You need to look at the other news events that impact the upcoming new event.  When you do this you will be able to see what the market sentiment is for the news and whether or not there will be a reaction on the market at all.




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