News can massively impact the forex market to the point that it moves - ForexLive - ForexLive
The importance of keeping tabs with the latest news
Imagine this scenario: you are going through some stocks that you think will give you profits. Two of them caught your attention. You decided to go with Stock A instead of Stock B. The following day, you turned on the TV and saw that stock B's company suddenly announced some strong news that massively boosts its name. Your first reaction would most likely be regret. You regret choosing Stock A over Stock B, and you might also be thinking about buying. Evidently, your take on stock B suddenly made a 180-degree turn. How do you think other or most of the market participants will react? Most probably, they are also thinking of buying stock B.
So, now we understand that behind all those patterns and formations we see in technical analysis, a fundamental force is there. Hence, if you know how to do and use technical analysis, you must also understand what drives forex markets. We can call this force "news."
The stock market, forex market, and the news
Now we have another scenario for you to think about. For instance, a few days before this news came out, a source told you about it. So, there is a possibility that you will act upon that news in your trading decisions, especially if the news source is credible. We can call this process of knowing the news beforehand "insider trading." In forex trading, this poses no problems - the earlier you know the information, the better chances at a profit. There will be no penalty, sanctions, or anything.
On the other hand, this is not the case for stocks. Yes, you might have scored a few more profits, but you might have to face legal actions if you ever get involved with these kinds of acts. Now, we understand how different the way things are in the forex market and the stock market, mainly how these two handle the news.
If that were you, what would you have done if you knew that a particular stock would skyrocket because of upcoming news in a few days? Wouldn't the initial reaction or thinking be "buy?" Is it not an excellent opportunity to bring home hefty profits?
Technology made a massive impact on the lives of everyone
Modernization and technological advancement made it possible to communicate easily with anyone who also has access to gadgets and the internet. It might be a great idea to combine both technology and the latest and hottest news. News is a driving force that massively impacts our trading point-of-views and even decisions. The same is true with forex trading.
Is news really relevant to trading?
Now, anyone can say that technical analysis is an essential tool in trading. How about the news? Can we say that it is equally as important? Again, the news is the driving fuel of the forex market. Every market participant or trader needs to rely on the news since it is the one that moves the market. If there is no news, it means that there is no market movement. Now, you tell me, is news important ? Invest in yourself. See our forex education hub.