How does news trading work and when to use it?
It is universally acknowledged that fundamental analysis is an essential part of online trading. The price comprises of fundamental characteristics of a business/commodity/country and the trust that investors have in an asset. As soon as something changes, changes the price.
How it works?
Imagine you trade stocks. And today the company releases a report on the state of its affairs. You know exactly when they release the report. You know what investors expect to hear. If investors are pleased with the news, the price rate increases. If they are unhappy - the rate decreases.
So, in other words, you know that at a certain moment the price will move.
How to use it?
So if you know that at 11 am there is an important announcement, what do you do? You go to your trading terminal at 10.45 and set two pending orders - one opens at 10 pip higher than the current price and one is 10 pip lower.
And as soon as the piece of news is released, the price rate starts moving to reflect investors' expectations and mood. Let's say that the news came up to investors' expectations. So the price goes up and your +10pip pending order is opened.
What should one do next?
It is hard to say how long can last the effect of the news. So it is best to lock in your profits at certain intervals. Some people use Fibonacci lines to close an order before the price rate hits it, and then open another order in the same direction once the price passes the level. Some people use other technical indicators to find such levels.
It is also important not to forget the second pending order, the one that was opened at 10.45 in case the piece of news displeases investors and the price goes down. Otherwise, it may bring some unwanted surprises later.
Is it really so good?
Yes, this strategy proved itself for thousands of clients and students at LH-Crypto educational centres. There are several things one needs to remember concerning this strategy:
- Lock in profits. Trading the news is based on the mood of the market, and it can change quickly;
- Know when the trend dries out. The news is a great stimulant for price rates to change, but it inevitably will dry out at some point. Once you feel that there is no fish any more, don't hesitate to stop trading.
When can one use it?
The only drawback of this strategy is that it can't be used on a daily basis. This world is full of information noise, and one needs to know which announcements to follow. Normally, they occur several times a week. Traders can find more info in LH-Crypto calendar of important events.
Where can one use this strategy?
Here in LH-Crypto, you can find all the necessary tools for successful trading. The smart algorithm will not only open pending orders in the right time, it will also find the best price from all the fluctuations and open an order with the best conditions.
The main advantage of trading with LH-Crypto is
that you can replenish your account and withdraw your profits in
cryptocurrencies, while still using all the traditional trading tools, high
leverage and professional trading terminal.
