The prevalent methods to make profit with Foreign exchange day trading is trading the forex news. That is, opening short term trades as per upcoming foreign exchange trading news reports. Yet, as most currency traders recognize, this is a very risky trading method and it is easy to get trapped into a losing position. You could use a good currency trading robot like Forex Autopilot (see FAP Turbo Review ) or the latest software Ivybot for normal trading. Forex day trading needs another. In this article we look at 3 critical factors that you need to consider if you need to gain from day trading according to forex news.
1. Market Sentiments
Not considering market expectations into account is a regular fault in reports based day trading. Let’s see this with an illustration. Let’s say there is an upcoming notice of US trade figures. According to you this report to be good for US dollar, so you open a trade right before the broadcast goes live.
But you forgot to take into account the fact that the currency trading market in general was expecting this announcement to strengthen the value of dollar, so actually, the price movement has been taking place gradually in the days or even weeks before the broadcast. When the report is made, there will be big price movements only if the report is considerably different from expectations.
In other words that your trades will only pay you well if the report is a lot more encouraging than anybody expected. If the report figures are good but not as advantageous as expected, the USD might plunge because the market outlook before of the report were too high. Hence you might actually lose your investment.
2. Slippage
Another factor to consider is slippage. Slippage is the difference between the price you thought you were getting (the price you clicked on) and the price that your trade gets filled at. Slippage depends on the broker to certain extent, but at the time of an announcement of an important financial report everyone can be affected just because the price jumps so suddenly.
For instance if you are not sure of how a news release will go but you are doing in forex day trading and you are hoping a breakout one way or the other, you might place an order to open a long trade if the price goes up to a specified point, say 1.2000, along with an direction for a short trade if the rate falls.
Yet, you could be in danger if the price unexpectedly jumps beyond your trigger. Say it goes up to 1.2050 . In such a condition you will perhaps notice that your order has been placed at a higher price than you intended, say 1.2030. If the price then drops, as it often does after a spike, it may settle down back at 1.2020. If your order had been placed at 1.2010 that would be fine, but at 1.2030 it is not. Thus slippage is another factor that can make a loser out of a winner in currency day trading if you are not careful.
You can see the detailed guide on forex day trading here.
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It is often the most savvy and seasoned traders who get the most financial benefit from the Forex day trading& fef lt;/b> system. One of the most crucial ingredients to your success is your amount of experience. Another important factor lies … Additionally, you should also be prepared with an equally solid secondary back-up plan.
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As a trader you probably have two main concerns: orders must be generated quickly, and securely. You want your order to be triggered as quickly and with as few delays as possible, in order to avoid slippage. … The important factor of this trading strategy is that it will tell you when and h fef ow you should exit trade.
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This post was written by admin on September 20, 2009
