Why?

This information usually reflects the strength of a given economy and may indicate the future direction of a given currency.

Trading the news is often difficult and not be suitable for everyone, but the volatility that follows can create lots of trading opportunities.

Why trade the news?

The simple answer to that question is “To make more money!”

But in all seriousness, as we learned in the previous lesson, the news is a very important part of the forex market because news has the potential to make the market move!

When news comes out, especially important news that everyone is watching, you can almost expect to see some major movement.The fact that you know the market will most likely move somewhere makes it an opportunity worth looking at.

Your goal then, as a news trader, is to get on the correct side of the move.

The Dangers of Trading the News

As with any trading strategy, there are always possible dangers that you should be aware of.

Here are some of those dangers:

Spreads Widen

Because the forex market is very volatile during important news events, many forex brokers WIDEN the spread during these times.

This increases trading costs and could hurt your bottom line.

You could also get “locked out” so your trade could be executed at the right time but may not show up on your trading platform for a few minutes.

This is bad for you because you won’t be able to make any adjustments if the trade moves against you!

Imagine thinking you didn’t get triggered, so you try to enter at the market price… only to realize that your original order got triggered!

You’d be risking TWICE as much now!