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Trading currencies during key economic news releases is a growing trend that is taking place among forex day traders. Currency pairs that move 100 pips or more within seconds after a major news release, such as the non-farm payrolls make news trading very attractive to short term traders, however, if you don't know how to trade key economic news releases properly, you can get yourself into a lot of trouble. You are warned!
How to benefit from key economic news releases?
There are dozens of key economic news releases each month, many of these key statistics deviate from a forecasted number. When this happens, currency pairs usually show a spike in the direction of the deviation. The main goal of a forex news trader is to take advantage of the discrepancy between the forecasted and the actual key economic number. For example, when the consensus number is bad and the actual number is (much) better-than-expected, there will be a spike up after the news release.
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The greater the discrepancy between the forecasted and the actual key economic number, the stronger the spike will be after the news release. Not only is the reported consensus number important, but so are the whisper number and the possible revisions. For example, the Non-farm payrolls (NFP) report has become incredibly difficult to trade due to the fact that massive revisions are made frequently, which significantly reduces the accuracy of each report.
Tools you need to trade the news
1. An economic data release calendar that provides the date, time, forecast numbers and states which currency or country will most likely be affected by a particular key economic data release, you will be able to find a good data calendar on our website.
2. A forex broker without any restrictions on news trading.
3. A fast and stable connection to the internet.
4. A fast news service such as Reuters or Bloomberg if you want to get in the market before the spike begins. Such a news service is very expensive!
What currencies are available to trade during news releases?
Key economic news reports are released several times/month for the following currencies:
1. United States Dollar - USD
2. Great Britain Pound - GBP
3. Euro - EUR
4. Japanese Yen - YEN
5. Swiss Franc - CHF
6. Canadian Dollar - CAD
7. New Zealand Dollar - NZD
8. Australian Dollar - AUD
Currency pairs you could trade for example:
EUR/USD, GBP/USD, USD/JPY, USD/CHF, USD/CAD, AUD/USD, etc.
Since the United States Dollar(USD) is involved in a majority of currency pairs, it is very logical to understand why US news releases tend to have the most impact on the foreign exchange market. Because it's high volatility, many news traders love to trade the GBP/USD exclusively during US economic data releases.
Non-Farm Payrolls ( NFP) Release Schedule: First Friday of the month at 8:30am EST
Key economic data release schedule
The list below displays the times (GMT) when the most important economic data for each of the following countries are published.
| Currency |
Country |
Time (GMT) |
| USD |
United States |
13:30 - 16:00 |
| EUR |
Germany |
06:45 - 11:00 |
| JPY |
Japan |
23:50 - 04:30 |
| GBP |
Great Britain |
09:00 - 10:00 |
| CHF |
Switzerland |
06:45 - 10:30 |
| CAD |
Canada |
12:00 - 14:00 |
| AUD |
Australia |
22:30 - 01:00 |
| NZD |
New Zealand |
21:45 - 02:15 |
Economic data releases to keep an eye on
Take a look here for US economic data releases.
Summary
Trading news releases are best suited for scalpers and forex day traders. There is no question about it that trading key economic news events are extremely difficult and very risky; most traders lose money to the extreme volatility. Never risk over 2% of your account on any of the news trades. If you are a novice trader, you are better off staying out during these new releases. It will save you money! |
