Contents
- 1 The main types of news used by traders on IQ Option
- 2 How to trade economic news on the IQ Option Platform
- 3 How to trade political news on the IQ Option platform
- 4 How to trade financial news on the IQ Option Platform
- 5 Pros and Cons of Trading the News 📊
- 6 Important Economic Indicators and Their Potential Market Impact 💹
- 7 Common Questions about Trading the News 🤔
- 8 GENERAL RISK WARNING
The financial markets react to various events in a more or less spectacular manner, sometimes giving money to speculators. How to trade the news? How to do it in order to gain an advantage in the market using knowledge? Today we are going to talk about this.
Key Takeaways🔑
| →Trading the news can provide valuable market insights and opportunities, but it requires a thorough understanding of various types of news events. |
| →Monitor economic, financial, and political news to stay informed about market-moving events and potential trading opportunities. |
| →Practice using a trading platform like IQ Option to develop your skills and strategies before committing real money to trading. |
The main types of news used by traders on IQ Option
The major news is economic, financial and political factors. News can change a market situation in a moment. If the news is positive currency rates or stock prices usually go up. If the news is negative they go down. So which news should a trader follow?
Economic releases and economic news
The first point of interest is economic releases or economic news. These are publications of various economic reports and statistics such as:
- gross domestic product,
- unemployment,
- inflation,
- interest rates,
- retail sales,
- and other data.
Financial news
Financial news represented by financial reports from companies largely affects stock prices. If financial figures are better than the forecast a company's share price usually goes up. If a company's financial figures are worse than the forecast. Its shares decrease in value.
Political news
A country's health is affected by political events:
- elections,
- revolutions,
- impeachments,
- death of political leaders,
- and other events that may cause political instability.
So it's important to follow political news.
Unforeseen events
Some unexpected events such as terrorist attacks or natural disasters like earthquakes, tsunamis or drought influenced markets too.
Keep in mind that the market's reaction to a news release usually lasts from 30 minutes up to two hours. But sometimes it can last for three to four days.
You can follow our smart news feed that accumulates news from multiple sources in the market analysis section on the left-hand side panel. In order not to miss the most important releases. Scan an economic calendar on IQ Option platform or at IQ Option Wiki calendar section.
How to trade economic news on the IQ Option Platform
Most important economic news and releases
If you ask the average day trader how to trade the news they will point to economic releases as the most important source of data they use to trade. Economic releases are publications of various economic reports and statistics. Such as gross domestic product, unemployment, inflation or interest rates, retail sales, industrial production index, trade balance and other surveys and data of great importance are announcements made by key representatives of major national financial institutions.
For example the Federal Reserve or the Department of the Treasury in the USA and the Bank of England in Great Britain. Let's take an example.
High impact news trading
On the 13th of June 2018, the US Federal Reserve raised its key interest rates by 25 basis points from 1.75 percent to 2 percent. As a result the dollar strengthened against the emerging market currencies and hit a three week high against the Japanese Yen following the Fed announcement.
A trader could make a profit by buying the US dollar and selling the Japanese yen (USDJPY) on IQ Option platform. The news feed is available in the market analysis section on the left-hand side panel.
In order to follow the economic news and releases use the forex calendar in the same section. At IQ Option Wiki you can also read about other types of important news you can use in trading.
How to trade political news on the IQ Option platform
Political events
Politics affect a country's economy and as a consequence has a major impact on its currency. The most important political events that can affect the economy are:
- elections,
- revolutions,
- impeachments,
- death of political leaders etc.
In other words, everything that may cause political instability. It's very important to follow political news if you trade currencies at IQ Option.
Brexit referendum as a political news
Let's study an example. On the twenty-third of June 2016, the Brexit referendum took place in the UK as a result the British vote impacted both Britain's economy and the British pound. The UK's currency dropped 10 percent against the dollar and reached its 31 year low overnight after the vote. Traders were selling the pound while investing in stronger currencies.
How do I trade in Forex news?
Political news is extremely valuable in currency trading. Politics has always been and will always be linked to economics. Sometimes it only takes the careless words of an important politician for the market for a currency to experience an earthquake. It is therefore worth listening to important speeches by important politicians. They often indicate the condition of a given national economy. From here it is only a step to assess the strength of a given currency in relation to others.
Statistics such as GDP, Unemployment Rate and others that indicate the state of economies can also be very helpful here.
Unexpected events
Some unexpected events not necessarily political ones may influence markets too. These may include terrorist attacks or natural disasters like earthquakes tsunamis or droughts.
Remember that a market reaction to unexpected breaking news is usually stronger than to scheduled data releases.
How to trade financial news on the IQ Option Platform
What is financial news?
Financial News is an important factor that influences a market situation. Publicly traded companies are required to publish various financial reports. That contain important financial data such as:
- revenue,
- net income,
- earnings per share,
- cash flows etc.
This information influences a company's stock price a lot. It's important to follow quarterly and annual reports in order to successfully trade stocks at IQ Option. In general, if the basic figures are better than the forecast a company's shares increase in value. If the report is below the market expectations a company's shares decline.
Q2 2018 financial report and its influence on stock price
Let's take an example. Google's parent Alphabet published quarter 2 results. Its revenue in quarter 2 grew by 21 percent compared to the second quarter last year and amounted to 26 billion dollars. The company's financial results beat market expectations following the news. The shares of Alphabet rose by five point three percent. And reached an all-time high of one thousand two hundred seventy-five dollars.
Pros and Cons of Trading the News 📊
Pros: 😃
- Opportunity to capitalize on market volatility during significant news events.
- Increased market liquidity during high-impact news releases.
- Helps traders stay informed about fundamental factors affecting market trends.
Cons: 😟
- Increased risk of false signals and price whipsaws.
- Market can become more unpredictable during news events, making it harder to apply technical analysis.
- Higher potential for slippage and widened spreads during high-impact news releases.
Important Economic Indicators and Their Potential Market Impact 💹
| Economic Indicator | Potential Market Impact |
|---|---|
| Gross Domestic Product (GDP) | Affects overall economic strength and currency valuation. |
| Unemployment Rate | Impacts consumer spending and overall economic health. |
| Inflation Rate | Affects purchasing power, interest rates, and monetary policy. |
| Interest Rates | Influences currency strength, investment flows, and borrowing costs. |
| Retail Sales | Signals consumer confidence and potential economic growth. |
| Industrial Production Index | Indicates manufacturing sector strength and potential GDP growth. |
| Trade Balance | Reflects the balance of exports and imports, affecting currency value. |
Earnings calendar at IQ Option
In order not to miss the most important financial figures scan an earnings calendar. On IQ Option platform the earnings calendar is located in the market analysis section on the left-hand side panel. Find here instructions on how to use the earnings calendar at IQ Option. how to trade the news in stocks
Today you have learned about the most important factors that can shake up the market. Of course, you don't have to read and know all the news to know how to trade the news. Focus only on the data that applies to the instruments you are trading. Remember also that some events can cause really big price movements. 1, 2 or 5% on the scale of a few hours are not uncommon for significant news events.
Sometimes the market reacts even before the data is released. Some say this is the work of insiders. This is probably true in some cases. However, sometimes the market discounts macroeconomic data and it is visible in the price behaviour even before the news is announced.
Remember that at IQ Option you can trade the news free of charge using the Market Analysis tool. There you will find the most important news from various markets. Today you have learned how to trade the news. Open the platform and see what's new on your favourite currency pairs, companies or commodities. Don't forget to share your insights in the comments section below.
Have a nice trading experience with IQ Option.
Common Questions about Trading the News 🤔
- Q: How can I stay informed about news events that may impact my trading?
- A: Use economic calendars, news feeds, and trading platform resources to stay updated on important news releases and events.
- Q: What types of news events have the greatest impact on market volatility?
- A: High-impact economic releases, political events, and major financial news can cause significant market volatility.
- Q: How can I manage risk when trading the news?
- A: Use stop-loss orders, maintain appropriate leverage levels, and avoid overtrading during high-impact news events.
- Q: Can technical analysis still be helpful when trading the news?
- A: Yes, technical analysis can provide additional insights, but be aware that market unpredictability may increase during news events.
- Q: How long do market reactions to news events typically last?
- A: Market reactions can last from 30 minutes to a few days, depending on the significance of the news and the specific market.