New Trading Strategy!!!

This usually involves trading based on news and market expectations, both before and following news releases. Trading on news announcements can require a skilled mind-set as news can travel very quickly on digital media. Traders will need to assess the news immediately after it’s released and make a quick judgement on how to trade it. Some key considerations include:

Is the news already fully factored into the price of an instrument or only partially priced in?

Does the news match market expectations?

Understanding these differences in market expectations is crucial to success when using a news trading strategy.
1) Treat each market and news release as an individual entity.
2)Develop trading strategies for specific news releases.
3)Market expectations and market reactions can be even more important than news releases.

Benefits of news trading
1) A defined entry and exit strategy. Entering and exiting a trade is based on how the market interprets the news, which is commonly outlined in a trader’s plan.
2)Many trade opportunities. Every day, there are several news events and economic releases that can provide trading opportunities. You can follow crucial news announcements by monitoring the economic calendar

Drawbacks of news trading
1)Overnight risk. Depending on the type of news, trading positions may be open over several days. Any positions that are left open overnight incur overnight risk.
2)News trading requires expert skills. News traders need to understand how certain announcements will affect their positions and the wider financial market. Additionally, they need to be able to understand news from a market perspective and not only subjectively.