Due to the continuous development of the internet and communication facilities for traders who trade on Forex via the internet, information becomes more accessible. That is why many traders and investors consider that by following the latest news releases, reading the same analysis and information reviews can make the opportunity to get a profit high, although not always so:
By following the news, there is a possibility of experiencing a large financial loss. Why does this happen? Without detailed consideration of financial losses, the true cause of this problem will be difficult to understand. Let’s make a careful analysis:
Almost every beginner trader assumes that applying the news in trading really will be profitable, but the assumption is wrong.
The first thing about the news is that the news reflects changes that have taken place in the market. However, usually, the assessment is not justified and the currency’s reaction to the news is almost different than expected.
Actually the main positions in inventory and demand are not carried out in the market, and at the same time there is no logic in their movement.
The main reason for lowering news is the market. That’s why trading with news is almost unreal. Therefore, knowing when some news will be published and how it affects the market, investors start acting. So that when the news is published the market reaction is difficult to see or there is absolutely no reaction whatsoever, because everything is taken into account with the price. Paying attention to people’s character is also important so that a real picture that shows the importance of the news will be seen.
Another reason that affects trading with news is human emotions that interfere with certain trading conditions – discipline. In addition, analysis is sometimes inappropriate. In situations where open transactions should be better closed, a trader will not do it, there must be a start of active movement.
At the same time, news should not be ignored. It is well known that the peak of the market often occurs because of news with positive estimates, and the market is low on the contrary because of unpredictable news.
It can be said that for traders with large capital, trading with major currency pairs will not use trading based on news, but rather apply it to a regulated trading system. Because the news has been recorded in the system, the News is also part of technical analysis which is an irreplaceable component of a well-regulated trading system.