Every single day the number of retail traders in the online industry is increasing at an exponential rate. Previously trading was pretty much limited to the large banks and institutions but due to recent technological advancement, the ordinary people are now easily getting access to the financial industry. Most of the reputed brokers are now offering a high-leverage trading account to the retail traders which allow them to trade different financial assets in the market with relatively small trading capital. The financial market is a dynamic market and if you don’t have the proper knowledge of trading the financial assets in the market then there is a high chance that you will lose a huge amount of money in trading. If you look at the statistics then you will see that out of every 100 trades only 5 are making consistent profit in the financial market. The market becomes extremely volatile during the event of the high impact news release and most of the new traders lose a huge amount of money since they don’t know how to trade the high volatile market conditions. In this article, we will discuss how to trade the high impact news release and make a decent profit.
Learn about the important fundamental news event: There are many different political and financial news release which acts as the price driving catalyst in the financial market. If you are involved in CFD trading then it’s extremely important that you know which important news event will have a heavy impact on certain financial assets. Since most of the largest movement occurs during the event of high impact news release many new traders often chose the wrong assets in the market and get badly burnt by extreme volatility of the market. But if you want to trade the high impact news release in the market then be sure that you know the possible outcome of the certain news release. Don’t take any trade in the market based on fundamental analysis only rather you should use the major three types of technical analysis to execute any orders in the market. All the professional traders always use the major three types of analysis since it greatly reduces their chances of error in the market. But as professional forex trader, you will often have some losing trades despite doing everything correctly. So be prepared mentally to accept some losses in your trading career.
Know your technical levels: Most of the retail traders in the financial market blindly trade the news data in the market. But in order to make a decent income out of trading the financial instrument in the global market, you need to know your technical levels. All the professional traders in CFD trading always focus on the key support and resistance level in the market since they know these are the most important levels for the traders. So once the market hits a certain key level they become cautious and trade the news data release. Before taking any trade in the market always make sure that you know the long term prevailing trend in the market. There is a well-known proverb in the forex market that trend is your friend. So if you become professional traders in the financial world then you will see how true the statement is in the financial sectors. Most of the time the price moves in favor of the long-term prevailing trend. When you draw the technical levels in the market make sure that you use the higher time frame and key swing in the market. If you don’t know how to draw the technical levels properly then it will be extremely difficult for you to trade the news.
Follow tight money management: All the professional traders in CFD trading community always make sure that their potential risk less than their reward. In order to survive the market, in the long run, you need to make sure that you understand the risk management factors very well. Since the market becomes extremely volatile during the event of the major news release it's highly recommended that you reduce your risk exposure in the market to a great level. Even the long term successful traders never risk more than 2% of their trading account capital during the high impact news release. As a professional trader, you need to learn how to embrace the losses in the market since if you fail to do so then it will be extremely difficult for you to become profitable in the long run. Always remember that losing is just a part of trading and all the professional traders always manage their losing trades in the market with the extreme level of precisions. If you follow proper risk management factors in every single trade then even after having more losing trades in your portfolio you will be able to make a decent profit in the long run.
Summary: News trading can be extremely profitable if you truly know how to trade the financial market during the extreme level of volatility. Don’t trade the news based on news data rather combine your technical and sentiment analysis result to take the best possible trade in the market. Use the higher time frame on the market to spot the key support and resistance level in the market and always trade in favor of the long-term prevailing trend in the market. As a professional trader, you will often have some losing trades in the market so try to reduce the risk in every single trade and trade within your risk tolerance level.
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