(whoosh) – In this video you’ll
learn the top two ways for making money from
economic news events. Now the first one involves
trading into the risk event. This is basically where you
buy or sell the currency in the days before the actual release and ride the move that occurs. The second one involves
trading out of a risk event. Now this is where you wait
for the figure to be released and then you buy or sell the currency based on the deviation in the data. Now the biggest factor, however, is something called market sentiment. And if you’re trying to
trade economic releases without market sentiment, you’re going to experience
lots of confusion, frustration and losses. Hi, it’s Arno here from Forex Source. And before we begin, hit the
button to follow or subscribe so that you’ll be notified every time that we release a new video. Okay, so you are probably aware that news moves currencies, right? You’ve watched it happen
time and time over again. Now when it comes to actually
trading the economic releases, let’s say from a calendar, you end up getting stopped out or you end up watching the price go in the opposite direction than what you thought it should. Now we know it can be very frustrating. But we also know that when
you apply two simple tactics you’ll see way more consistency
in your news trading. Now the first tactic we’re gonna look at is known as trading into risk events. This basically just means that
you anticipate a price move as the economic release time gets closer. For example, if there is
an unemployment figure being released from the
United States next week, this could provide us
with a great opportunity to trade into it. Let’s see how all of this will work. The first key point that we need to know for trading into a risk event is we need to know what
the expected number is and what the previous number is. There must be either a positive
or a negative deviation from that previous reading. For example, let’s say the
previous reading came out at 5%. We need the forecasted
or the expected number to be either higher or lower than that. Next, we need that forecasted number, this is very important, to line up with the
prevailing market sentiment. For example, if the previous number was 5% and the forecast is expecting
the next one to print at 7%, this would represent a
positive expectation. But if the market is very
negative on the currency at that time and everybody is selling it, we would not view that
risk event as tradeable. At least trading into it. Despite the expected positive reading the sentiment of the market at that time would most likely ’cause
traders to simply ignore that particular data point. Now on the other hand, if
the sentiment was positive and then we also had a
positive expected figure on the horizon, it’s likely that the market
would buy the currency into that event. Now all of this means that the currency would most likely rise
in price in the days leading up to that specific
economic data release. Now as you can imagine, this can provide us with
great trading opportunities. And when we have the forecast and the sentiment lined up like this, trading into risk events
can be extremely profitable. Now the second tactic that we can use for trading economic news
events is trading out of them. Now this just basically
means that you wait for the actual data figure to be released and then you enter based on whether you
see a very big positive or a negative deviation
in that actual figure. So let’s quickly see
how this method works. With this strategy, the key
is how the actual number deviates from that expected number. Now we would trade out of risk events if and when the actual number deviates from the expected number
in the way that lines up with the prevailing market sentiment. Now a simple example is
when the market sentiment is positive and the
expected number is negative but the actual release comes out with a big
positive surprise deviation. For example, imagine the current sentiment is positive on the dollar and the previous number for the risk event is 5% and the markets are
expecting a 3% number. So we know that the expected
number is a negative deviation. But the actual release comes out with a big positive surprise at 7% and that would be a very big deviation in line with the current
positive market sentiment. So any deviations, higher or
lower, in line with sentiment can ’cause the price to move and obviously give us a
clear trading opportunity. However, as you might have guessed, it’s not always quite that simple. And again, like the first example, the most critical factor in all of this is the prevailing market sentiment. That sentiment must match the deviation in order to generate
a clear tradable move. For example, if the number
prints a positive deviation but market sentiment is very
negative around the currency any reaction is likely to be
muted from that data release. So we need that deviation to match with the prevailing sentiment. This means that you should
only trade risk events when you know specifically what you are waiting for to happen. You can then plan how you will react and how you will trade it, which of course gives you a
much clearer and higher chance of making money from these events. Now as you probably noticed, the key to trading economic news events is not in the news itself. But rather that prevailing
market sentiment on that currency. Without the context of
the market sentiment, the news releases is
virtually meaningless. And if you’ve ever tried to trade news without factoring in the sentiment, you’ll know exactly
what we’re talking about and you’ll know that
confusion and frustration that it can cause. So make sure to pay attention
to the market sentiment when you try to trade
economic news releases. Guys thanks for watching. The idea for this video came from you guys that ask us questions
about the fundamentals in the comments section. So please, keep all of
your questions coming. And as always, do us a big favor and click the like and the share button if this content was helpful. We’ll catch you guys in the next video. Cheer. (whoosh)

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13 thoughts on “How To Trade Forex With An Economic News Event”

  1. Can you also please do a video explaining the safe heaven and brexit and how this works.

    Thanks so much , your videos really help and now I see clear pictures of what is happening.. I feel like when I’ll stick around I’ll learn a lot.

  2. Hey I have a question today BOE member said there might be possible rate cut and GBPUSD fell which was unexpected news. Market sentiment for GBP bearish due to Brexit uncertainty. Is it safe to sell GBPUSD pair on pull backs or fibb levels??? Please respond

  3. Hi there. thanks for your nice and rich video about market economic news.
    the question I have is "How a trader can get a currency's sentiment?"

  4. can you please demonstrate on chart how you see market sentiment. and what time frame would it give better indication of market sentiment

  5. A very nice and the knowledgeable video from you guys

    thank you smile jarret and this guy which explain in that kind of nice way

  6. Hey! In the Trading into risk event you gave "US Unemployment Data" as an example and then went on to say If previous was at 5% and the forecast is at 7%, this would be a POSITIVE expectation???? Am I missing something here? The Unemployment Rate measures the percentage of the total work force that is unemployed and actively seeking employment during the previous month.

    A higher than expected reading should be taken as negative/bearish for the USD, while a lower than expected reading should be taken as positive/bullish for the USD.

    Please clarify 🙂 Thanks

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