When trading Forex it’s important to understand the most important factors which affect currency pairs and their movements. While there is a vast number of hidden factors which have a slight impact on a currency pair’s trend, there are certain factors which have an extremely significant and strong affect on a single pair’s trend. One of the most important factors is the news. For more info please visit these sites:- creditkranti.com
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Business, political and stock market news have always had a strong affect on the Forex market. Unlike technical analysis, news can be much easier to interpret, especially for new traders, because it is generally straight forward and one can determine which currency pair a certain headline is going to affect by simply looking at which country or region of the world it came out of.
Long Term vs. Short Term Effects
While news trading can be very profitable, it is generally only useful when trading in the short term, as headlines have a much stronger effect on the short term movement of currencies rather than the long term. Long term trading strategies should be based more on technical analysis than on fundamentals, but the news still holds a key aspects in long term trends. This key aspect has to do with breaks in a trend.
News & Specific Currency Pairs
Although a certain currency pair’s trend may be moving up or down, market or political news can cause a break in the trend. This break can be very small or quite significant depending on the headline and investors’ reactions to it. When trading in the long term, a quick break in the trend may not have a significant affect, besides a slight profit draw down which is likely to disappear. If trading in the short term, as most traders do, can be very helpful.
