You read everywhere that there are two kinds of Forex trading styles: (1) News or fundamental trading which is also known as trading Forex news releases; and (2) technical trading or chart analysis
Therefore, novice Forex traders try to choose one of these ways at the beginning of their Forex trading journey. Many of them go for the first option because they think it is easier and less technical and complicated. However, the question is, are they really right? Can you really make money easier through trading Forex news releases?
I have already published another article that explains about this topic in detail and describes the most effective and high impact Forex news, which is known as “Non-Farm Employment Change” that I strongly recommend you to read: Trading the High Impact Forex News: Methods, Pros and Cons
In this article, I will explain about some wrong impressions and beliefs that novice Forex traders have about news trading that causes them to waste lots of time and money. Trading Forex news releases is not what most people think. So, let’s focus on the question that the title of this article is focused on and explain why you should avoid trading Forex news releases.
Should You Avoid Trading Forex News Releases?
Yes, you should. Trading Forex news releases is nothing but wasting of time and money. I have several reasons for this. Unlike what most traders think,
- usually you cannot trade the Forex news releases through shorter time frames.
- brokers cannot always offer fixed and low spread during the news release time.
- sometimes markets don’t follow the same direction that the current month’s news release says, when the current month’s actual value of the news has a significant difference with the previous month.
- most of so-called Forex news cannot move the markets reasonably to form trade setups to enable traders to make some profit.
What you read here can be different from what you see in most articles on the Internet because here I am talking about the real Forex traders’ experiences, whereas most articles you find on the Internet are written by freelance writers who have never traded Forex. If you want to find the right way of trading Forex, you must listen to real Forex traders, not those who read and rewrite articles. Therefore, don’t get surprised if what you read here in this article is different from what you have already read or will read on most other sites. Also, if you don’t listen to what you will read here, you will come back to our site to learn the correct way of Forex trading, probably after waiting lots of time and money. So, try to choose the right way from the beginning, and keep in mind that most articles your read on the Internet aren’t written by real Forex traders. Over 99% of Forex traders lose. Therefore, over 99% of articles that you read on the Internet are wrong.
Those who tell you that trading Forex news releases are the best, less risky and most profitable, are not true. Even few years ago, I signed up for a Forex signal service that was managed by a lady who introduced herself as the most professional trader who followed the Forex news releases to trade. Both herself and her husband also worked as traders and Forex market analysts for one of the most famous Forex brokers. So, I was really curious to try her Forex signal service to see how it worked. I paid her for a couple of months, but I saw nothing but mess. She tried to “manufacture” a trade setup out of each and every one of the news releases and economic factors related to all different currencies, but all her signals hit the stop loss. I canceled my membership, and she also shut down her website after making so much mess.
There are some important conclusions here so far:
Although I knew that trading Forex news releases didn’t work and I just anted to watch her try to do it, she made me realize that I was 100% right. The other conclusion is that most of those who introduce themselves as the best Forex traders or market analysts are crooks. Probably they can talk or write about Forex trading very well, but when it comes to real trading, they always lose. Unfortunately, the Internet is full of the articles and videos of these so-called professional traders, Forex experts and mentors who mislead people.
Trading Forex news releases doesn’t work for four main reasons:
1. Usually, You Cannot Trade the Forex News Releases Through Shorter Time Frames
If you are after waiting for news releases and getting in the markets on shorter time frames like 15min chart, once the news is released, then you are 100% wrong. You cannot do it in most cases. It can be possible on the demo accounts, but it is not possible in the real world.
In most cases, markets don’t react to the Forex news releases at all. You think a trade setup is formed on the chart after the news release, but it is not a trade setup. It is just the normal price fluctuation. You push yourself to enter the markets anyways, after the news release, whereas this is a big mistake. You must enter the markets only when there is a strong trade setup formed on the charts, not when a news is released and you think that markets must move in the direction that you think or the news release says.
Even when the news succeeds to create a strong movement and trade setup on the charts, it is impossible to get in the markets right after the news release, with the price and spread that you want. Brokers are not able to execute your orders on time and at the price that you want because markets become too volatile and spread goes too high. It becomes worse when you trade with a market maker broker because Forex news releases are great chances for them to make you lose: 6 Ways Forex Brokers Cheat You
Trading Forex news releases is impossible through the shorter time frames and right after the news release. In most cases, the news release cannot make the markets move, and in case it can, you cannot get in the markets with proper price and spread. So, either you won’t make any money, or you lose.
When the news is really strong and has a high impact, it forms strong trade setups on the longer time frames like daily and make the markets follow the trade setup for several weeks or even months. Professional traders wait for strong trade setups on longer time frames, and they get in the markets with peace of mind and when the dust is settled after news release.
2. Brokers Cannot Always Offer Fixed and Low Spread During the News Release Time
Only market maker Forex brokers are able to offer fixed and low spread during the news release time because everything is under their control, even the spread. However, they never do this because they don’t want you to win. Your profit is their loss. So, they dramatically increase the spread after the news release to pretend that their platform works normally, because in the real Forex market, it is normal to have a too high spread after the news release. But market maker brokers are not the real Forex market. They just increase the spread, slip the price and requote to make you lose.
With ECN/STP Forex brokers that connect you to the real Forex market and liquidity providers, still it is not easy to get in the markets right after the news release, with the price and spread that you want. Prices change so fast and very frequently and spread goes too high. If you place pending orders, sometimes they get triggered tens of pips away from the price that have been set. So, not only you won’t make any profit, but you can also lose lots of money because usually stop loss orders cannot be triggered where or around the level they are set.
Therefore, trading Forex news releases is almost impossible to implement, right after the news release, on the shorter time frames, and through Forex brokers, either market maker or ECN/STP. That’s why professional traders don’t care about the Forex news releases. They wait for the strong trade setups on longer time frames, like daily, weekly and monthly, in case they are swing traders, and in case they are day-traders, still they don’t try to get in the markets on shorter time frames, right after the news release. They wait for strong trade setups to form on charts.
3. Sometimes Markets Go against the News Direction
You may not believe this, but I have seen this a lot that markets sometimes go against the news direction. For example, I have seen that USD/CHF went down instead of going up, when the new “Non-Farm Employment Change” was much better than the previous month. This means, traders who wait for the news’ actual value to take their positions can be in trouble when the price goes to the other direction. That’s why I say you must wait for markets to form a trade setup on charts because even the news’ actual value cannot show your the right direction sometimes.
Those who say you can make money trading Forex news releases, never tell you about these things because as I mentioned above, they are not real Forex traders. They just write articles.
4. Most of So-Called Forex News Cannot Move the Market
When you want to learn how to trade Forex news releases, you will be faced with a long list of the high impact Forex news, almost on all sites. You feel like finding a treasure because you think that you can take some positions when each of them get released. But this is not true at all. 99% of them, even those that are marked as the high-impact Forex news have absolutely no impact on Forex and other markets. There is only one news that can move the Forex market, which is “Non-Farm Employment Change”. I have explained about it here.
So, what is the solution?
Should You Forget About Trading Forex News Releases?
Yes, you should. As I explained above, you should not let freelance writers and marketers mislead you. They write and talk about the things they know nothing about and have never done before. 99% of those who try to make money through Forex trading on their own will lose money. They give up after wasting lots of time and money. For many of them, the most important reason of their failure is that they have been misled by articles and videos that can be found everywhere on the Internet. They spend their time and money on strategies that don’t work. Trading Forex news releases is one of them.
You need real Forex traders who show you the right way. If you are new to Forex trading and you haven’t become a consistently profitable Forex trader yet, first start from these articles:
One you are done with learning the basics, you can choose a trading system which is based on technical analysis that shows you trade setups that form on charts. You need to learn to trade based on what you see on charts, not what you hear from people.
If you are in rush to start making money through Forex trading as soon as possible, which makes a lot of sense, you must join people who show you the right way to do it. Trading Forex news releases is not the solution. You should connect to professional traders who not only teach you how to analyze the markets and locate the trade setups on your own, but also tell you where and when to buy and sell to start making money before you become a consistently profitable Forex trader.