In this article I want to speak about a popular tendency that occurs among Forex traders wanting to take advantage of market lack of effect in the announcement of economic news. Although this strategy is somewhat dangerous, I’ve seen how traders benefit from it.

What are the principles of operating of economic news?

Some institutions, for example the Federal Reserve System, announce the release of economic data, such as non-farm payments, gross domestic product, consumer price index and so on. You can always find a calendar of outlet of economic data on the Internet. It is checked historically that different economic news will influence the price of currency pairs that are associated with them. For instance, Non-Farm Payrolls tend to strongly influence the U.S. dollar.

Notwithstanding in the long term it is very complicated to predict the price alteration of specific currency pair, typically on the news there is a short-term spike. This spike is the result of discrepancy between the predicted numbers (consensus) and the actual data that was released. This phenomenon let a lot of traders find the ways to take advantage of divergence between the consensus and the actual economic data.

Selection of time.

Between the release of economic information and alteration in price of specific currency pair there is a time delay. Precisely because of this delay, a lot of speculators can use this inefficiency in their interests. As a rule, in the room where economic data is declared it is allowed only a limited quantity of staff of major news agencies. After the announcement of the news these employees have to give data to the newsletter of the organization, such as Reuters or Bloomberg.

The key to success in terms of timing for the trader is to enter into a transaction before the spike starts to form. Prior to the announcement of data the most of the “clever money” is in standby, but as soon as they obtain information, they begin trading. Therefore, for a trader the rapidity at which he can get information becomes very important. Thus, if a trader has a rapid access to news and the software tuned to the disparity between the consensus and actual data, then having displayed dexterity, he can get to windward of some of the trade banks. For the most part, banks use the same technology as traders, trying to capitalize on these situations.

And while a lot of more “dark money”, which used slow news providers, dropped on the spike later than the players with professional information services, promote a price far enough so that smart traders began to come out of their positions.

Trading on the spike.

To enter before the spike, it is needed some technique. First, you should have a quick data provider; you may purchase Bloomberg or Reuters. The variant may be subscription to the service, which transmits signals during the news release. These services usually have many channels of fast delivery of data and transmit signals to buy and sell. These services are usually more inexpensively and easier to implement than paying thousands of dollars for fast data receipt. This kind of service has only one disadvantage – delay of signal propagation.

Today people are looking for additional or even primary sources of income as never. World economy is still in tough condition, and to find a well-paid job is not that easy task. And forex is one of the ways to earn some money. To trade successfully one needs to know events on the market, so live forex news is of great help here. Those who don’t know where to get fx news can use the online network. Just type “forex news trading“, for example, in Google or other search engine and you will get many news sources to choose from.