News Trading

You don’t need to be a financial expert to do well in the field of finance. This might not make sense at first, but a lot of trading comes from learned intuition about how current events influence asset prices. In fact, both major and minor news events can have a significant effect upon the price of a bond, stock, index, commodity, or even a currency pair if the timing is right. Usually this is limited to financial news, such as when the Federal Reserve issues a big announcement, but it doesn’t need to be. Legal, political, and social events can impact prices, and even natural disasters can have a lasting image upon a market. Knowing the basics of what type of news will affect a certain class of assets is a key strategy toward maximizing the profits you make off of an easy type of research.

You need to start where you’re most interested. A lot of political junkies will watch the news and read articles online on a daily basis, but knowing how to turn that knowledge into money seems like a totally foreign objective. In reality, it’s not a big jump at all. For example, if the government passes a big bill that would lead to raised costs for retailers, the companies that have many retail outlets would probably see earnings go down in a significant manner, and when the top institutional traders got wind of this, stock prices will go down very quickly. Staying ahead of this trend, or at least jumping on at an early point, can lead to big earnings in a short time. These earnings can get a big boost if you use something quick like a string of five minute binary options to take advantage of this.
News Trading
Timing is important with any type of trading, but it might be even more so with the news. This is because news is only a small part of an asset’s overall picture. And what’s more, is that news tends to have an overblown effect at times. For example, a report might come out that Apple is pace to sell 5 million fewer devices this year than the year before. This would undoubtedly lead to a selloff, but what happens when Apple announces a positive correction a day later, and shares are gobbled back up to account for the previous day’s incorrect report. Things like this happen, and you can definitely profit off of both incorrect and correct news, but you do need to act fast and appropriately. This is why a lot of traders subscribe to streaming news services that can deliver relevant financial news right to your computer on an instant basis.

Not all assets react the same way, and your profits will not be the same between different types. For example, when you are trading an index like the Dow Jones Industrial Average and the EUR/USD pair, one positive news report of seemingly equal value to both assets will have different results. The Dow tends to move slowly, while currencies can move in a sometimes alarming fashion. Furthermore, Forex trades are exacerbated when you throw leverage into the mix, making big swings even bigger.

The point is to be careful and be smart. Trading the news seems easy, but you still need market knowledge, and mixing trading the news with both fundamental and technical analysis tools will be your best long term bet.