Best Practices for Trading Based on Economic News

In January 2023, the financial markets experienced a surge following the publication of the first non-farm payroll report of the year. This event recalled memories of the Covid outbreak in February 2020, a period when market volatility was significantly high. These instances serve as powerful reminders that news, whether anticipated or unexpected, has a considerable influence on financial markets. This impact's duration can range from a few hours to several months, proving the necessity for traders to stay informed and leverage the opportunities created by these events.

Understanding and Leveraging Economic News in Trading

News events, ranging from oil spills, corporate earnings reports, or national GDP announcements, all have implications on global financial markets. It's often simpler to navigate trading based on economic news because the timings of these announcements are usually pre-known.

When scheduled news is about to be released, market volatility is typically apparent. It persists for a while post-release until traders have fully processed the information. This process underscores three essential steps for trading based on economic news:

1. Information Gathering

Although having a financial calendar to track scheduled economic events is crucial, it's not sufficient on its own. Traders must also be privy to everyday occurrences worldwide, considering that these events don't occur in a vacuum. Traders can access countless news channels, social media platforms, and other internet sources, but filtering the most relevant news amid this overflow of information is critical. For instance, an oil trader needs to stay informed about OPEC nations, while a trader interested in precious metals requires specific market news concerning those metals. A platform that offers pertinent, customized information can be invaluable for brokers.

2. Analyzing Market Impact

Traders must comprehend the potential effect of news events on their markets. For example, the US non-farm payroll could influence global markets, while a natural disaster in a country might only affect its local markets. Especially for scheduled events, it's crucial to assess the market's expectations and the degree to which the actual report deviates from them. These factors shape market sentiment and consequently, the direction of market movements. Traders require access to market analysis tools for economic events related to their trading instruments to comprehend how their portfolio could be impacted.

3. Formulating Trading Strategies

To leverage the volatility driven by news updates, traders need actionable insights for their trading decisions. After understanding the news's impact area and intensity, traders should identify feasible entry and exit points. They also need to grasp the potential risk factors and put into place effective risk management measures.

However, it's almost unfeasible for traders to track all news and analysis across various online sources. Therefore, brokerages must provide their clients with ample support through economic calendars, real-time news feeds, social media sentiment analysis, dynamic market analysis, and trading signals.

Enabling News-Based Trading for Traders

Brokerages can equip traders to navigate news updates by enhancing their platforms with sophisticated analytics tools. The initial step is collaborating with a technology provider that can deliver analytical reports directly to their clients through email and messaging services. Furthermore, adopting a multilingual platform can aid brokerages in expanding globally. Selecting a comprehensive solution with news and social media sentiment, market analysis, and reporting tools can boost trader retention and engagement, fostering the brokerage's growth.

Consider installing the WikiFX App on your smartphone to stay updated with the latest news. Download the App here: https://social1.onelink.me/QgET/px2b7i8n