Event trading, or news trading, in forex involves watching an Economic Calendar. Traders monitor macroeconomic releases, central bank announcements, và news about political events or geopolitics. These events may move the currency pairs they trade.
Traders analyse news releases and their impact when trading forex. This approach is known as fundamental analysis.
When trading around events, traders can use phân tích kỹ thuật. They focus on price movement, volume, indicators, chart patterns, and price trends.
However, in this article, we will look at how to trade forex around news releases. Economic data and events strongly influence currencies. Traders watch central bank policies and economic growth indicators like GDP, inflation, and employment figures.
These indicators reveal how well a country’s economy is doing. If it is growing, this positive news supports its currency. Such news often pushes the currency higher, prompting traders to buy more. Positive news tends to push a country’s currency up, prompting market participants to increase their bets and buy that currency.
This is a quick summary of how economic data relates to currencies and how news impacts the currency market. Let’s examine each news release and how traders use them to shape strategies and find opportunities.
Event news and forex trading
When trading forex, traders have to be aware of the various forces that move this decentralised market.
A huge and volatile market with plenty of opportunities, the forex market reacts to real-time financial releases. Geopolitical events and economic indicators from regions like the Eurozone or the US affect currencies differently.
Positive political news, like a Trump-Zelenskyy meeting or an Israel-Gaza ceasefire, can boost investor confidence and market sentiment.
As a trader, being aware of such developments and how they may impact the markets can help you make timely decisions and explore opportunities in a way that is effective and rewarding.
How different releases and events impact forex
Some news like an unexpected announcement from a central bank changing its policy and cutting or increasing its rates and taking markets by surprise can really create volatility and support or weaken a currency. When other news aligns with market expectations, it usually has little impact, and the currency tends to remain stable.
How to use an Economic Calendar
Your broker or various independent financial websites may provide an online Economic Calendar. An Economic Calendar is a list of information in the form of a table and includes the times, currencies, events or macroeconomic indicators’ names, a percentage which shows the impact of the specific event, the consensus—what the market expects—and the previous reading.
Under the impact and next to the percentage, traders can see a bar and, depending on how important the event is, it may be red in colour indicating high impact, or yellow, and it could be full or half-way full also suggesting how important the impact may be.
Event example: Michigan Consumer Sentiment Index
For example, taking, let’s say, an important announcement on Friday (16/5/25), which is the preliminary reading of the US Michigan Consumer Sentiment Index for May, I can see on the table the time of the release which is 14:00 (GMT), the impact with the bar fully loaded and red, telling me that this event is important and may move the USD, as well as the previous reading which is 47.3 and the expectation or the consensus which is 48.
Accessing More Information
Some more detailed calendars may provide more information. By clicking on the name of the event you may be able to see more details about why this is important.
If Details Aren’t Available
If you cannot see more info, then you can search why the Michigan Consumer Sentiment Index is important. Released from the University of Michigan, every month, this survey measures the sentiment of US consumers and covers three areas: personal finances, business and buying conditions.
Why It Matters
The final number released will reveal whether consumers are willing to spend money, and this is significant as consumer spending is one of the main drivers of the US economy.
This survey has historically been shown to be very accurate when it comes to showing the future path of the US economy. If there is a high reading then this tends to be very positive for the US dollar, whereas if the reading is low, then this tends to weaken the US dollar. Unexpected readings, which may be more positive or more disappointing than the consensus, may create more volatility.
Implications for Growth and Policy
The importance of having a high reading when it comes to consumer spending is big as it exemplifies bigger and faster economic growth, a healthy labour market and a potential rise in inflation.
All this information encourages the Federal Reserve, the central bank of the US, to feel positive about the state of the economy and provides evidence to them that they can be hawkish and raise interest rates if needed.
Timeliness of the Data
The survey is also popular among analysts because it includes interviews conducted just one or two days before the official release, providing very recent insights into how consumers feel and their current attitudes about the economy.
Currency pairs affected by economic data
If you are trading the news, you should pick a currency pair that responds well to economic releases.
For example, forex pairs like the EUR/USD, GBP/USD, or USD/JPY move when the US NFP is released. When the ECB releases its interest rate decision, euro pairs like the EUR/USD or EUR/GBP also respond well.
Similarly, when Australia releases its employment data, traders expect the AUD/USD and AUD/JPY to move accordingly.
Quản lý rủi ro
Trading news would require you to possess a good risk management framework. Do not trade the news in the absence of a stop loss. To reduce risk, trade less on major events. Avoid high leverage because large movements and leverage can bring large losses.
Watch out for spread widening during news, as brokers may widen spreads. Also, slippage can lead to your order being executed at a price lower than you anticipated, particularly in fast-moving markets.
Tools to assist you when trading news and events
The following resources are necessary for traders to be successful in event-driven forex trading:
- Economic calendars for timing of events and market consensus data. Live news feeds from Reuters or Bloomberg.
- Tools that track the movement of the pip in real time are called volatility alerts.
- Expert Advisors (EAs): Use MetaTrader to automate breakout or straddle strategies.
To create a comprehensive perspective, many seasoned traders combine price action, chỉ báo kỹ thuật, và analysis of economic data.
Some more tips
Maintain your composure during the storm. During news events, emotional control is crucial. Prices have the potential to whipsaw violently. Remain disengaged from the result of any one trade, and refrain from trading in retaliation if you are blocked.
Consider this: “Am I trading emotionally or with a clear plan?”; “Have I adjusted my trade size to reflect my risk tolerance?”; “Is the trade predicated on intuition or on data and price behaviour?”
Forex news trading isn’t for everyone, but it rewards those who work hard, manage risk, and think strategically. Determine events that will have a significant impact and prepare with context. Select the appropriate approach: confirmation, fade, or breakout.
Take great care to manage your risk. Instead of becoming overwhelmed with market noise, use data and tools to inform you and provide direction. Remain composed and disciplined.
Any serious forex trader must comprehend how economic releases impact currency markets, regardless of whether they trade the news directly or just want to stay out of the storm.
Khước từ trách nhiệm: This material is for general informational and educational purposes only and should not be considered investment advice or an investment recommendation. T4Trade is not responsible for any data provided by third parties referenced or hyperlinked in this communication.
