Trading Forex News

Pros and Cons

Many systems trade the Forex news as their primary strategy. While this can bring in big pips, it can also be extremly risky. Here are some of the pros and cons that you can expect from using a system that trades the news.

Pros

The primary advantage of trading the news is that you can bring in some big money. If you have ever seen the Forex market after a big news event, you know exactly what can happen to the price of a currency pair. Within a matter of a few minutes, the price of the pair can move by 300 to 500 pips in some cases. While this does not happen every time, it is a distinct possibility. If you happen to choose the right direction of the movement, you can make an unbelievable amount of money in only a few minutes. Get rich quick anyone?

forex news

Another advantage of this type of system is that you know in advance when you will place your trades. You can look at the Forex calendar in advance and find out when the news announcements will take place. Then you can go about your business and simply come back when the action is about to go down.

Cons

Obviously, if you can make a lot of money with Forex news trading, you can also lose a lot. The problem with this type of system is that you really do not know which direction the market is going to move. With a regular system, if the trade starts to go badly, you can simply get out of it and cut your losses. With a news system, you may not get that luxury.

Another issue with trading the news is that brokers may not honor your requests. During periods of economic craziness, your broker may not honor stop losses or take profit orders. This has happened on more than one occasion and it can completely blow out your account.

The Verdict

Using a Forex trading system that trades the news is a high risk/high reward endeavor. As if the Forex market itself was not high risk/high reward enough, this takes the risk up a notch. If you engage in this kind of trading, you need to make sure that you do not have any heart conditions or high blood pressure because it can really start to stress you out. With that being said, if you are a high roller who likes to gamble, there really isn't a faster way to make money.



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