News Trading Strategy

This strategy is very popular among traders, as it requires no knowledge at all. The only thing that you should do when using this approach is to follow the most important news, and when you see that there can be a local trend, you can engage.

Those who decide to use a news trading strategy will benefit from the following advantages:

• There are several opportunities throughout the week. There are important news stories every week and you can find some interesting ones almost every day;
• There is no need to learn technical analysis. When trading on news, the only thing that matters is the importance of a particular news release. In general, you don’t need to think about those lines or indicators. However, to make your news trading strategy even stronger, you can add some technical analysis tools to it;
• News releases can provoke huge local trends, especially when the final result differs from what was forecasted by experts.

However, like any other aspect of trading, news trading has its own disadvantages. Here they are:

• You never know whether a particular event will provoke any reaction. Sometimes, the price already includes the reaction on the news even before the data is released;
• Spreads may become broader. When you trade Forex CFDs, you should always be aware of spreads. They may become broader during important news releases.

Knowing all the pros and cons of news trading strategies, you can decide whether to use them or not in your trading routine.