Forex News Trading

Some traders and investors in the Forex market engage in a practice referred to as news trading in which they trade foreign currencies immediately before or after the release of key economic news or data to the public. In most cases, after such announcements, short-term movements often occur in the market, which can offer opportunities for massive profits or losses within a very short time.

Advantages

The technique of news trading has at least three advantages to your trading. Importantly, the likelihood that a country's currency would either appreciate or depreciate within minutes of a major financial data announcement enables you to make huge gains from the fluctuations. For instance, if the United States Federal Reserve Bank releases an economic data to indicate that the interest rate has been revised upward, then you are likely to buy the United States dollar with the anticipation that its price will increase such that you will be able to make profits.

After the release of major economic news, a country's currency can appreciate or depreciate by almost sixty to one hundred points almost instantaneously, and this is what can enable you to make quick gains worth thousands of dollars. In addition, since the Forex market operates 24 hours in a day (from 5pm EST on Sunday until 4pm EST Friday) the regular economic announcements give you the opportunity of incorporating news into your trading. The majority of currency brokers have at least eight major currencies available for Forex traders and investors for trading.

Thus, there is always a scheduled release of some important economic data to the public and you can harness such opportunities to make significant profits in your trading. Lastly, there are at least seven major economic announcements that are made each day; therefore, trading the news can make your trading much more reliable, less taxing, and, more so, you get compensated faster!

Disadvantages

On the other hand, trading the news has at least three disadvantages to your trading. During important economic announcements, there is often extreme volatility in the market and brokerage firms tend to widen their spread, which increases your trading costs, could hurt your bottom line, and, ultimately, could make your trade targets harder to achieve. Next, in attempting to trade the news, you could also get "locked out" by your broker.

This happens when your have executed a trade at the correct time but the order takes sometime before you can see it in your trading platform. Clearly, this denies you the opportunity to make any necessary amendments suppose the trade goes against your initial projection. Imagine if your order fails to show up in your trading platform for a few minutes then, in fear, you enter another trade... Your risk could be two times as much now!

Lastly, trading major economic news makes you to be at a high risk of experiencing slippage. During such events, currency prices tend to move very fast due to extreme volatility in the market; therefore, slippage takes place when the price at which you planned to execute a trade is different from your actual transacted price because your order has been filled at a far different price.

This is the biggest predicament with placing stop or market entry orders because most often they are filled at an entirely different price from the one you had intended; sometimes past your profit target or stop loss, which increases your risk per trade.

Conclusion

Major economic news is important in the Forex market because it is the fuel that moves it. Thus, proper analysis of the Forex fundamental variables can prove to be of great benefit to your trading. Nonetheless, always remember to "buy the rumor but sell the fact."

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Cheating Forex Broker Indications

There are many Forex brokers available, which is why it can take a long time to choose a broker. The Forex market is largely unregulated and although there are regulatory authorities, not all brokers are regulated and there are scammers about. There are noticeable indications of cheating Forex brokers though, that you should recognize.

First of all, make sure to watch all of the orders you place. Your broker is responsible for executing your orders and this means they can essentially do as they wish. Confirm that nothing suspicious goes on, regarding your broker and its filling of your orders.

Some brokers offer fixed spreads and others don't. However in general, brokers that offer variable spreads tend to be less reliable and cheating Forex brokers tend to use variable spreads. The spread is the difference between the buy and sell price of a currency pair. Spreads differ across different brokers and currency pairs. Forex brokers make their money through the spreads - larger spreads will make brokers more money, so lower spreads are always more appealing as they are cheaper to traders and investors in the Forex market. But variable spreads mean that brokers can change these spreads when they like, which allows for potential cheating. Although variable spreads are sometimes recommended due to the high liquidity of the currency market, it is recommended that you go to a broker that provides fixed spreads.

Stay away from Forex brokers that formulates its spreads according to the account types of its clients. Generally, traders and investors will receive wider spreads with these brokers and these brokers tend to be cheaters.

If a Forex broker makes many promises that sound too good to be true, they probably are. Remember, scamming brokers scam potential traders and investors through fraudulent marketing primarily. Don't give in to false claims, when it comes to choosing a broker. It is advised that you also request a full print of your chosen broker's policies too, for reference.

Customer service and support is incredibly important for any type of business, including for a Forex broker. In Forex trading, you want your broker to be able to answer all of your questions and queries. If your broker cannot respond to your messages and problems, move on. Make sure that your chosen broker has a good customer service team - if a broker does not, this will indicate that they are a cheat.

In conclusion, there are multiple indications of cheating Forex brokers, including: variable and ever-changing spreads, spreads formulated according to client account types, unrealistic claims and poor customer service and support. Remember, not all brokers are cheats and there are many good online brokers available. But beginners especially, should make sure that they go to a broker that is recommended, credible and legitimate as they are most vulnerable to scammers. Bear in mind that most Forex broker scams work through fraudulent marketing, so make sure not to buy into false claims. If in doubt, approach real Forex traders and investors through forums and websites, making sure not to of course go to a biased forum or website. Alternatively, you could check up on a broker through the right regulatory authorities.

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