A very popular trading strategy of late is to trade the news in forex. This refers to sitting in front of your computer waiting for a major news announcement to hit the wires such as the Non Farm Payroll, GDP, or other high impact releases. There are many problems with trading the news such as high spreads, sporadic markets, and interpreting the data properly. However, even if you are able to overcome the aforementioned items, you still must be able to get the release at least as quick as everyone else. The major problem for new traders is that the major banks and big players actually get the data several minutes before the retail traders see the release. On top of that the initial numbers are not always right and revisions will come later. There are premium news services that will provide a industry level news service for a few hundred dollars a month. Many novice traders plunk down the cash believing that if they have fast access to the news they can get in and out before anyone else and profit handsomely f95zone.

The problem for traders is that once they have the news it is not easy to interpret. Sometimes the numbers have already been anticipated into the price so the markets may not move. More often than not good news will result in selling and bad news will result in prices rising. This is because people predicted these numbers and already made their profits. The term buy rumor sell news confirms this activity. Therefore, the big moves happen when the numbers come out vastly different than expected. Sometimes, you can make a good profit in these situations. Yet, it is still hard to know for sure what the direction will be. Sometimes really good news means the market will go down for a couple weeks, but by the end of the quarter it will be up big from the release. All releases are important, but do not always drive the market in one hour.

Now even if you are correct on direction and timeframe you still must overcome the large spread during news hours. Sometimes spreads can be over 15 points. This is some serious handicap to overcome. Further with the wild moves and shakeouts you may exit a winning trade before it moves in your favor. The truth is that short term trading is the most difficult type of investing. It takes full concentration for all market hours with the top trading equipment and an emotion free personality. A much simpler way to still make nice returns is to follow a swing or position trading system. By moving timeframes out further, it is easier to follow longer term trends and not get caught up in the noise of the market.

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