Trading the News Forex Strategy


What is "News Trading"? Don’t let the simple name fool you. News Trading may sound simple, but it is a technique used to trade on financial markets that can only be sharpened with time and practice.

"News Traders" who use this method make trading decisions based on breaking news, economic reports or other events that may affect price action in the long- or short-term.

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They may also use historic data to anticipate the extent to which a planned news announcement may affect a market and how long it may take for the market to correct itself, after-the-fact.

Awareness is key to excelling with this strategy, so the more news that traders consume, the more likely they are to become successful.

People who apply this strategy to their trades often spend much of their time reading the latest financial news and smartphones have made it even easier for us to keep updated with news stories as soon as they emerge.

For news junkies, this might sound like the natural approach to trading, but the reality is that many people simply dont have the time to follow the news cycle throughout the working day.

If this is the case, traders can also benefit from following LIve Market Analysis in order to gauge market sentiment without having to be first-hand consumers of the news. EagleFX’s Live Trend Alerts inform users of significant price movements right as they happen!

Forex Strategy: News Trading

It goes without saying that news stories trigger changes in market prices, especially when it comes to Forex Trading, as news stories can have a direct impact on a country’s reputation and economy.

Currency rates - the basis of the Forex Market - depend greatly on news releases and, since the Forex Market is open 24/5, important news events may have an effect on currency rates no matter what time they occur.

Among the many types of news that can affect exchange rates are:

  • Monetary Actions (such as Monetary policy decisions coming from major banks, including interest rate changes, changes in income and price changes);
  • Macroeconomic Releases (such as a country’s economic output, unemployment rates and inflation);
  • Geopolitical events (such as wars, political scandals, elections, nuclear bomb tests and terrorism).

In the News: Oil Price War

Oil prices went into negative for the first time in history on April 20th 2020 as the US Oil benchmark West Texas Intermediate (WTI) fell from $17.85 at the start of the trading day to negative $37.63 by the time the market closed.

This deeply bearish sentiment was increased by the Coronavirus - which caused a decrease of ⅓ of the global demand for oil barrels - and by the announcement that OPEC+ agreed to cut output by 10 million barrels a day to stabilise oil prices.

The initial event which triggered uncertainty in oil traders, however, has been attributed to the price war between Russia and Saudi Arabia. This record event shows how several factors can produce a compound effect on a market.

But even as the markets crashed, CFD traders could profit from this drop by opting to open sell positions on oil.

Trade Commodities such as USOil, UKOil, NGAS and more at Award Winning broker

Trade CFDs with Leverage

Trading the news can also be applied to other assets such as stocks. Companies like Tesla, Facebook and Apple often make headlines, and their share prices tend to react to the press they receive. Social Media tends to amplify price movements, and even a simple tweet can cause share prices to skyrocket or plunge.

For example, Tesla’s share price fell rapidly after the company’s CEO Elon Musk tweeted “Tesla stock price is too high imo” on Friday 1st May 2020. The price soon recovered and soared to new heights, however, at the time of writing on July 14th 2020, the stock closed at $1,516.80!

The possibility of trading CFDs with leverage creates opportunities for traders to maximise their earnings when applying this Forex trading strategy to their own trading activity. Even though historical data may lead traders to assume that a news event will trigger market movements, one cannot know for certain in which direction those movements will occur.

There are a number of tools that traders can use to help manage positions effectively, such as ‘Stop Losses’ and ‘Take Profit’ features. These types of market orders will automatically close a position when the price reaches a level specified by the traders, acting as damage limitation or flexible price speculation.

Online Broker EagleFX offers up to 1:500 leveraged trading on a range of Forex, Stocks, Indices, Cryptocurrencies and more. Sign up for free and start trading with a minimum $10 deposit with !

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About EagleFX

EagleFX is an ECN Forex and Cryptocurrency broker providing CFD trading on a variety of assets within optimal trading conditions backing into the award-winning MT4 platform.

EagleFX offers deep liquidity, leverage up to 1:500 and 24/7 live customer service. Start trading with a minimum deposit of $10 and benefit from same-day withdrawals with !