Description of news transaction

Description of news transaction

Learning how to trade news is a great skill that every trader should have under their belt, as news is at the heart of any trading or investment strategy. Find out everything you need to know about news trading before taking a position.

What is a news transaction?

News trading is a method of using the latest news about stocks, currencies and other markets as the basis of your strategy. This may include economic reports, company announcements (earnings, management changes, stock splits, etc.), and unexpected geopolitical events.

Increasingly, social media is also influencing trading strategies. With the rise of the Reddit forum, which allows independent traders to join Wall Street, Elon Musk tweeted to wipe out millions of dollars from the value of his company with one hand.

What to findBuy rumors and sell news

How to read news for trading

Reading the news seems like an easy task. In most cases, even non-traders do this every day. However, to read the news of a transaction, you need to be able to determine what will and will not affect the market.

Broadly speaking, news articles can be divided into two categories: regular articles and unexpected articles.

  • The Regular news This is a planned press release. Checking them on the economic calendar at least a week ago, financial markets have time to analyze, forecast and evaluate the information, even before it is released. This news does not necessarily cause price fluctuations unless the results are not what you expected. Examples include central bank interest rate decisions, economic data releases, and quarterly results.
  • The Unexpected news It is an announcement that no one has come. These include pandemics, geopolitical conflicts, meteorological events, terrorist attacks and financial crises. Due to the sudden nature of this news, when the news breaks, traders and investors try to prepare their positions for the results, which can cause ripples in financial markets. These are also known as Black Swan events.

How often you read the news depends on your trading strategy. Most long-term investors avoid chasing news and make event-based decisions very rarely. However, traders can find opportunities in the short-term volatility that follows the event. For example, a day trader may check the news feed several times a day to identify opportunities.

Positive news creates buying opportunities, while negative news usually creates selling pressure, which can create selling opportunities.

News trading

News announcements tend to be felt in financial markets such as stocks and indices. This means that you need to fully understand the news announcements and how they have affected the market before trading.

However, it is important to understand that history is not always repeated. You need to implement proper risk management to mitigate the risk of making a mistake.

You can also practice your news trading strategy with your practice account before moving to your live account.

How to trade stocks using news

It’s important to think about how stocks and sectors will be affected by news events. For example, in the event of a recession, industrial stocks tend to hurt profits as projects begin to decline, while defense stocks can survive the recession.

The most common way to trade stock using news is to set alerts specific to your current holding company or the company you are interested in. The events you are looking for are:

  • Publication of results – Known as “buy rumors and sell news” because big moves tend to occur before the event itself, including future revenue analysis.
  • Corporate behavior – Dividends, stock splits, mergers, acquisitions, etc.
  • Government economic report – Employment statistics, durable consumer goods data, GDP, etc.

Look at us Economic calendar For the upcoming announcement.

How to trade currency in forex using news

News trading is a common forex strategy given the 24-hour nature of the market. Unlike the stock market, the forex market is always open and often hits the list market outside of business hours.

The forex market is known for its volatility anyway, but a large number of traders taking positions after a news release can create even more volatile prices.

In most cases, currencies respond to the release of economic data, which is considered an important indicator of economic health. These include:

  • GDP
  • Non-agricultural salary
  • Home sales
  • Consumer price index

Again, the biggest move follows the surprising result that the actual numbers do not match expectations.

You can start trading news on Forex.com.

  • open Actual account where connection To an existing account
  • Investigate the market you want to trade
  • Enter a position and add a risk management tool
  • Transaction monitoring and termination

Alternatively, you can practice your news trading strategy first. Demo account No risk.

Rebecca Cattlin, CMT, FOREX.com »Official Site

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Disclaimer: The information and opinions contained in this report are provided for general information purposes only and do not constitute a foreign exchange trading agreement or offer or solicitation to buy or sell CFDs. The information contained herein is from sources that appear to be reliable, but the author does not guarantee its accuracy or completeness and may result from reliance on such information, either directly or indirectly. We are not responsible for any damages that may result.