Credit Card Debt Guide

The widespread methods to make profit with Foreign exchange day trading is trading forex news. This means opening short term trades based on forthcoming forex news. In spite of this, as most currency traders know, this is a very risky trading system and it is easy to get trapped into a losing position. You could use a good currency trading software like FAP Turbo or the new ivybot for normal trading. However the forex day trading according to forex news is different. In this article we look at 3 very important factors that you need to take into account if you want to profit from day forex trading based around forex news.

1. Market Expectations
Failing to take market expectations into account is a very common fault in news based day trading. We will explain this with an example. Imagine there is an upcoming notice of US trade statistics. You are expecting this report to be beneficial for the dollar, so you open a trade just before the broadcast is due.

However you forgot to take into account the fact that the financial market in general was expecting this report to strengthen the dollar, so in reality, the price movement has been taking place little by little in the days or even weeks before the report. When the announcement is live, there will be big price movements only if the broadcast is notably changed from expectations.

That means that your trade will be profitable only if the report is significantly encouraging than anybody estimated. If the report statistics are good but not as advantageous as expected, the USD might go down since the market hope in advance of the announcement were exceedingly high. So you could in reality lose your investment.

2. Slippage
Slippage is the difference between the price you wanted to get while placing the trade and the price that your trade gets filled at. Slippage depends on currency trading broker to certain level, but at the time of an announcement of an important financial report everyone can be affected merely because the price is highly volatile.

For example if you are not sure of how a significant fiscal report will go but you are involved in currency day trading and you are expecting a breakout one way or the other, you might place an order to open a long trade if the rate goes up to a specified point, say 1.2010, along with a corresponding order for a short trade if the rate falls.

Yet, you could be in danger if the price suddenly jumps beyond your trigger. Say it goes up to 1.2050 . In this condition you will probably realize that your order has been placed at a higher price than you planned, say 1.2030. If the price drops after this, as it regularly does after a run through, it might stay back at 1.2020. If your order had been placed at 1.2010 that would be fine, but at 1.2030 it is not. Therefore slippage is another issue that can can cause losses in day trading if you are not careful.
You can see a more detailed guide on day trading forex here.

Share This