How To Tell If News Will Be Positive Or Negative (Forex)

Summary

In this video, the speaker explains how to predict whether Forex news will have a positive or negative impact on a currency pair. By using Forex Factory, the speaker demonstrates how to interpret news data, including the importance of understanding the impact level (low, medium, high) and analyzing past data. The video highlights how technical analysis and fundamental news analysis work together, showing a real example with GBP/CHF. The speaker also promotes a Forex course and a free trial for those interested in learning more about Forex trading.

Takeaways

• 😀 Forex news can influence the price of currency pairs, and understanding this impact is key to successful trading.
• 😀 Forex Factory is a valuable tool for tracking forex news and understanding its potential effect on the market.
• 😀 News events are categorized by impact level: yellow (low), orange (medium), and red (high). Traders should focus on the red and orange categories for more significant news.
• 😀 The 'usual effect' of a news release tells you if the news is generally good or bad for the currency, helping predict price movement.
• 😀 Historical data is crucial to understand how similar news releases have impacted the market in the past.
• 😀 Positive news for a currency typically leads to an increase in its value, while negative news can lead to a decrease.
• 😀 Technical analysis, such as identifying trends and support/resistance levels, should be used alongside fundamental analysis to make more informed trading decisions.
• 😀 In the case study of GBP/CHF, positive news for GBP led to a clear price increase, validating the use of news analysis for predicting market movements.
• 😀 It's essential to be aware of upcoming news releases as they can cause sudden and significant price changes, impacting open trades.
• 😀 Trading requires both technical and fundamental analysis, and understanding both can improve your ability to predict and act on market movements.
• 😀 Forex Factory provides a convenient way to monitor and analyze news events, offering detailed information about upcoming releases and their expected impact on currency prices.

Q & A

What is Forex Factory and how is it useful for forex trading?

Forex Factory is a website that provides forex news and updates, which helps traders assess the impact of news events on currency prices. It categorizes news by impact level (low, medium, high) and shows the time of release, allowing traders to prepare for potential market shifts.

How are the times on Forex Factory displayed, and why is it important for traders?

The times on Forex Factory are displayed in Eastern Standard Time (EST). Traders need to adjust these times to their own time zone to anticipate when news events will occur and potentially affect the market.

What are the different impact levels for news on Forex Factory, and what do they mean?

News events on Forex Factory are categorized into three impact levels: low (yellow), medium (orange), and high (red). Low-impact news has minimal effect on the market, while medium and high-impact news can significantly move currency prices.

Why should traders focus on medium and high-impact news rather than low-impact news?

Traders should focus on medium and high-impact news because these events have a greater potential to move the market. Low-impact news does not typically lead to significant price changes, making it less relevant for trading decisions.

How can traders determine whether a forex news event is positive or negative for a currency?

Traders can determine if a news event is positive or negative by checking the 'usual effect' on Forex Factory. If the actual news is greater than the forecast, it is considered positive for the currency, leading to a potential increase in its value.

What role does historical data play in evaluating the impact of news events?

Historical data helps traders assess past outcomes when similar news events occurred. By analyzing the previous effects (positive or negative), traders can predict how the market might react to the current news event.

What is the significance of the 'usual effect' section on Forex Factory?

The 'usual effect' section indicates whether the actual news release is expected to be good or bad for the currency. If the actual result exceeds the forecast, it typically indicates a positive impact on the currency's value.

How does a trader combine technical and fundamental analysis when trading forex?

A trader combines technical analysis, which involves looking at market trends, support, and resistance levels, with fundamental analysis, such as news events from Forex Factory, to make more informed trading decisions.

What trading strategy was applied in the example with GBP/CHF?

In the GBP/CHF example, the trader combined technical analysis, recognizing a support level, with the fundamental news (positive GBP news). The news indicated a potential increase in GBP value, which led to a successful trade when the price surged after the news release.

Why is it important for traders to stay informed about upcoming news events?

Being informed about upcoming news events is crucial because news can quickly move the market. Without awareness of these events, traders may face unexpected price fluctuations that could trigger stop-losses or affect their trading positions.