Brokers that allow you to trade news releases
When you engage in news trading, you are purchasing or selling a foreign currency either immediately before or immediately after a significant economic announcement has been made public. Why?
Because after such statements, it is reasonable to anticipate that market prices may fluctuate, which means they will either rise or fall. Your objective, of course, is to make a profit off of these changes in price in a straightforward manner.
Any currency pair has the potential to see very rapid price movement in either direction within just a few minutes before or after the announcement of economic news.
A technique known as “news trading” is one that aims to capitalise on opportunities that present themselves in the markets whenever pertinent economic data and information is reported in the mainstream media.
During each and every trading session, economic news and data are one of the primary factors that can cause significant price shifts or volatility. This indicates that news trading offers consistent possibilities for trading, despite the fact that these opportunities are not devoid of associated risks.
The news market is mostly driven by events, and as a result, trading based on the news presents some unique challenges when compared to traditional technical and fundamental approaches.
In technical analysis, the belief is that past price action will influence future price behaviour, with the assumption being that all essential information about the value of an asset is reflected in its current price.
Technical traders constantly monitor the market and base their trades on observable patterns in the charts, as well as mathematical indicators.
On the other hand, fundamental analysis entails evaluating all of the underlying economic, social, and political aspects that have an effect on the value of a specific asset.
Although news trading is often considered to be a fundamental subset of fundamental analysis, it does have certain distinct characteristics of its own.
In this article, we explore some of the best Forex brokers which allow for news trading, and take a closer look at how to trade the news successfully.
Best news trading brokers
1. Khwezi Trade
Khwezi Trade was established in 2013, and is a local South African broker that is regulated by the FSCA. It features minimal deposit ZAR accounts, rapid trade execution, and a reputation for putting the customer first when dealing with traders.
Every customer of Khwezi Trade receives a daily email with Flexi analysis from a 3rd party, and the company also provides its customers with access to a portal that displays fundamental analysis of all currency pairs.
FXCM has been in operation since 1999 and has its headquarters in London. FXCM’s no-requote policy makes it a good option for news trading.
For a Mini account, their lowest spread is about 1.5 pips, while for a Standard account, it’s at least 0.5 pips plus an additional commission of 0.04 USD every 1000 units.
As opposed to several other brokers, FXCM does not use MetaTrader 4. Instead, they support Trading Station, an internal platform that can be customised with a number of add-ons and indicators.
Since InstaForex’s spreads are fixed at roughly 3-7 pips, even when the market is extremely volatile due to news releases, it may be a good choice for news trading.
In addition to the well acclaimed MetaTrader 4, MetaTrader 5, and InstaForex’s proprietary WebTrader, InstaForex provides its clients with a wide selection of trading platforms from which to choose. They also provide the convenient One-Click-Trading (OCT) function as an add-on.
However, there are several factors that you need to be aware of regarding news trading in InstaForex. The first point is that during major news events, profits cannot exceed 10% of the account balance, and the position must be open for at least 5 minutes before being closed.
To prevent misunderstanding and blunders during news trading, InstaForex gives a basic overview of this particular approach in a collection of forex articles and its trading education area which beginners may take advantage of.
Orders placed with XM are guaranteed to be executed within 1 second, there will be no requotes, and the spread will be incredibly low.
Micro and Standard accounts have floating spreads beginning at 1 pip, while the Zero account has no spread at all. XM not only permits news trading, but also provides numerous alluring promotions including signup bonuses, trading competitions, and initial deposit incentives.
Top tips for trading the news
The news can be broken down into two categories: regular and unexpected. General elections, quarterly earnings reports, and announcements of economic statistics such as interest rates and jobless rates are just some of the events that are planned.
An economic calendar, news feeds, and even social media can be used to keep tabs on upcoming developments.
The majority of news trading methods revolve around anticipating and reacting to scheduled events, and traders can reduce their exposure to risk by keeping tabs on when those events are set to occur.
The opposite is true with unexpected news, which consists of happenings that are so unexpected that they can catch investors and traders off guard. The timing and magnitude of their effects are unknown.
Events like the 2008 financial crisis and the predicted coronavirus pandemic in 2020 fall into this category.
Because it is impossible for traders and investors to tell when the panic-inspired short-term impact will finish and the expected long-term correcting move will begin, sporadic news is a major source of risk in the market.
Find trading opportunities
The goal of news trading is to consistently take profitable positions. In other words, your transaction coincides with the market’s reaction to the news. Trading is possible before, during, and after the announcement.
If you trade in anticipation of an occurrence, it shows that you have a directional bias and, if you’re correct, you’ll profit. If you’re incorrect, however, you could lose a lot of money.
Trading at the time of a news event’s announcement can be wise because you’ll be basing your decisions on accurate information.
There is no assurance that prices will move in the direction that an actual news release implies, and spreads tend to increase as news events are released. It’s smart to do trades after a news release so you can observe the market’s reaction first-hand.
Keep track of the news event
You can only profit from news trading if you are aware of the specific types of news that affect the asset you plan to trade. The Economic Calendar is a useful tool for keeping tabs on upcoming news events, and it’s even better because it also shows how much of an effect those events are anticipated to have on the underlying asset.
Include technical analysis
Using technical analysis in conjunction with news trading can lead to substantial gains. If you want to take advantage of a news trading opportunity, you need to keep an eye on the crucial technical characteristics of the underlying asset.
You should know the underlying trend and key support and resistance levels that will act as price objectives for take profits and stop losses before the news is released. Before, during, and after a news event, technical tools like moving averages, pivot points, and even oscillators can assist traders find value pricing zones to target.
It is vital to deal with a reliable broker like Khwezi when trading the news. Many factors, including the broker’s compliance with legislation, features, and quality of customer service, should be considered before settling on an account with them.
But apart from that, a savvy trader will be aware of the importance of having a broker who can keep up with their trading strategy and help them achieve their goals. To be successful, traders need to prioritise conditions in accordance with their trading strategy.
Foreign exchange (forex) news trading refers, in a nutshell, to making currency transactions in the forex market in response to trading opportunities presented by economic news announcements. An unexpected piece of news has the potential to drastically alter the market’s valuation in a hurry. Many investors play the markets because of the high volatility and short trading cycles.
In order to capitalise on this trend, traders must have access to both lightning-fast execution and adaptable market circumstances. At this juncture, the quality of the broker’s service becomes critical. It’s possible that your broker isn’t ideal for news trading if your trade orders are constantly being requoted when major news is released.