News and their expectations during stock trading.
Almost every trader is familiar with the news trading strategy, which involves opening trades immediately after
the release of this or that news.
But not everyone knows that sometimes the market reacts more strongly to expectations than to the news itself, and using this aspect in trading brings much greater profit than transactions after the news is released.
Therefore, when conducting fundamental market analysis, one should take into account not only those events that have occurred, but also those that are still expected.
At the same time, there are public and hidden factors that should also be taken into account when planning your transactions on the selected currency pair.
Only in this case will you be able to reduce the number of errors when opening positions. • Typically, trading on news is based on a fairly simple scheme - after the benefit of the next news, its impact on the currency is analyzed and if the impact is positive, a deal is opened to buy this currency, if negative - to sell.
Retail sales volume in Australia. Impact of the news on the AUD/USD currency pair
Retail sales volumes are directly correlated with the Australian dollar's exchange rate. This
indicator allows traders to easily assess the state of the Australian economy, its growth dynamics, or, paradoxically, its deterioration.
The index compiles data on all retail sales from various store owners and retail outlets, including both small businesses and large retail chains.
What can retail sales volume data tell us?
Primarily, it tells us how much money the country's citizens have. If citizens are actively purchasing goods and retail turnover isn't declining, but rather increasing, this indicates that people are earning money, have strong government support, and a healthy economic climate, which contributes to higher social standards and overall well-being.
Factors influencing exchange rates
If you learn to determine what affects exchange rates, you can consider yourself almost successful in Forex trading.
After all, this aspect is the basis of trading on the currency exchange; it is enough to simply know after what event the price will go up, and what news will cause an increase in the exchange rate.
The main thing is to correctly determine the weight of the event that occurred and its degree of influence on the trend.
Factors influencing the exchange rate are nothing more than the appearance in the press of reports about changes in the economic or financial situation, which in one way or another relate to a specific currency.
In other words, these are fundamental factors that are closely related to a particular currency and put pressure on its price.
Most of the so-called news trading strategies .
Employment changes in Canada. Impact of the news on the USDCAD currency pair
Employment is an indicator of the well-being of a country's economy, its good
investment climate and the health of the economy as a whole.
Fundamental financial analysis should always take into account employment data, as it also affects the value of the Canadian dollar.
In fact, the logic for a trader and investor when releasing this indicator should be very simple.
The more people are employed, the less unemployment benefits need to be paid, and as a result, the burden on the country's main budget decreases.
Also, do not forget that the greater the number of people employed, the greater the percentage of taxes the state will collect, which directly leads to strengthening the economy, increasing social standards and the development of the state in various sectors.
Types of fundamental news.
Even if you do not trade on news, it will be useful for you to know what types of fundamental news are divided into and what impact they have on fundamental market analysis.
And what impact, depending on this division, do they have on the rates of the currencies being studied.
First of all, all news can be divided into two categories - random and expected, random ones happen spontaneously, no one plans their appearance in advance, expected ones come out on schedule.
You can familiarize yourself with an analogue of such a schedule by studying the Forex calendar .
Each news, in addition to the release time, has several additional parameters.
US Consumer Confidence Index. Impact of the news on the USDCHF currency pair
The people's confidence in the stable growth of the state's economy and satisfaction
with the current situation within the country is a good sign of confident growth and stability for any economy in the world.
There are many myths surrounding the US Consumer Confidence Index, the main one being that the release of this index has no impact whatsoever on the US dollar exchange rate.
The US Consumer Confidence Index is measured through a standard survey of 5,000 households, who express their opinions on the current state of the economy and share their thoughts on the future.
Simply put, the confidence index allows us to see how much the average consumer trusts and believes in the stability of their country's economy. Therefore, it's important to keep this in mind when conducting fundamental analysis on Forex.
Index of pending sales in the real estate market. Impact of the news on the Euro/Dollar currency pair
The real estate market has always had a significant impact on the national currency exchange rate. Many
traders ignore this data when conducting fundamental analysis on Forex.
Considering that real estate and the dollar exchange rate are completely distant matters, since such a small indicator for the US cannot in any way influence the world currency.
In fact, this is a big misconception, which can be argued with simple common sense.
Let's say you're an ordinary citizen and you want to buy an apartment, but due to a lack of money, you simply can't do it, just like the rest of our country.
In many ways, it's not even your fault; you can work hard for years and still not raise the money for your dream.
First of all, this speaks of the country’s weakness, its low wages and weak economy as a whole.
Consumer price index. Impact of news release on the Pound/Dollar currency pair
Every novice trader who decides to trade using fundamental analysis in Forex
faces the problem that he simply does not know how certain news can affect the market, how long the price moves on average after the news is published, and why the market sometimes does not react to it.
Many sites write on their pages about the importance of fundamental indicators and that they can be used to trade, but, unfortunately, it is almost impossible to find practical information on how to apply certain news.
I also had to face this problem, so I decided to conduct my own analysis and some kind of mathematical calculation.
Using fundamental analysis in practical Forex trading
Forex trading is based on two methods of market analysis: technical and fundamental analysis. While the latter seems simpler to apply, it raises many questions.
At first glance, it seems simpler to simply open a trade in the direction of the trend after a news release. However, in reality, the market doesn't always behave correctly, and prices move irrationally.
Therefore, if you want to trade forex most effectively, you should follow a few simple rules for opening and closing trades, taking into account fundamental factors.
Market entry and fundamental analysis
The key to Forex trading has always been entering the market, but this requires not only choosing the right trade direction but also taking into account the risk of a trend reversal.
There is no point in closing a position just before the release of important news, since if this news causes a trend reversal, the trade will close with a loss.
How various economic indicators affect the exchange rate
Currencies react quite sensitively to changes in the economic indicators of the issuing country; sometimes, after a news release, a currency pair can move several dozen pips in a matter of minutes.
Therefore, it's important to know what might follow a change in the key interest rate or an increase in unemployment; there aren't many key indicators that actually influence the exchange rate.
When conducting fundamental market analysis, it's important to understand the relationship between these changes and the currency's reaction to them.
In addition, it is necessary to take into account the capacity in which the analyzed monetary unit is included in the currency pair.
The impact of GDP on the exchange rate.
GDP, or Gross Domestic Product, is one of the most important economic indicators characterizing
a country's economic performance. GDP is the total amount of goods and services produced domestically, expressed in monetary terms.
The higher the value of this indicator, the more optimistic the forecasts for economic growth in a given country.
Analysis of GDP dynamics, which is compared with values from previous years, is particularly important.
Positive GDP dynamics serve as the basis for strengthening the national currency and play a significant role in attracting foreign investment. For this reason, some countries use certain methods to artificially inflate GDP.
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