Economic reports

Trading the News

Trading based on fundamental news can be a tricky matter. You can have a situation where the numbers come out very good for the asset that you want to buy, yet the asset will drop in value. This happens because the participants in the market have certain expectations of what numbers will be in the report. They will speculate on the outcome before the economic report comes out and place their trades early. If the report does not live up to their expectations, it won’t matter whether the news is good or not, the market can seemingly move in the wrong direction as the early speculators dump their positions. Trading the news is very risky and should only be done after several years of forex trading experience.

Summary

Fundamental analysis is an important part of learning to understand the markets. In the short run, the results are not always straight forward, they can even seem backwards. In the long run, currencies will always move along with fundamentals. Learning to use fundamental analysis will help you to understand the reasons behind trends and give you insight into currency movements.