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Why the novice traders should avoid news trading

There are many ways of trading the financial instrument in the financial industry. The trading system greatly varies from traders to traders. In the United Kingdom, all the professional traders use their own developed trading strategy to execute quality trades. In order to make a profit on a regular basis, you need to develop your own trading system based on your personality. But the novice traders simply don’t understand this fact and follow other people trading system. It’s true that they will be able to make some profit by blindly following successful traders system but in the long run, they will be ultimate losers of this industry. The financial market is changing in every single second and if you don’t trade with your own developed trading system then it’s highly unlikely that you will be able to adapt to changes in the market dynamics. So instead of blindly following successful traders system, work hard and learn the details of this market. Once you have the solid knowledge you can easily develop your own trading system in demo account.

News trading

News trading is very much popular among the novice traders since the market becomes extremely volatile. Most of them think the volatile market is the best place to make money. It’s true that big winning trades are executed during extreme market volatility but find the perfect trade is not so easy. Most of the rookie traders lose money during the wild swings of the market. After facing a drastic loss during the high impact news release they start taking excessive risk to recover their loss which ultimately makes their loss much bigger. News trading is only for the experienced professional who has years of trading knowledge. And you also need to find a high-class broker like Saxo so that the trades are executed without any significant delay of slippage.

False Spike and change in trade

Nothing absolute in this world. Similarly, the trend of the exchange traded funds often gets changed after the major financial data release. Most of the new traders blindly trade in favor of the trend without thinking about the probability of trend change. And in some cases the market exhibit wild spikes which easily hunt the predefined stop loss of the traders. So your normal trading strategy is not going to work for news trading. You need to develop a very special trading system which will allow you to trade the market in the lower time frame during high volatility. But at you early stage it’s better for you to learn the fundamental analysis before trading any news data. Fundamental analysis will give you a clear insight into the strength of the prevailing trend.

How to trade the news

Before you consider yourself as a new trader you need to have a strong knowledge in technical and fundamental analysis. Once you have the perfect trading system to trade the normal market focus on price action trading strategy. Learn all the candlestick pattern so that you can easily understand the nature of the market movement by seeing the formation of Japanese candlestick. After mastering the perfect art of price action trading strategy you need to switch to the lower time frame and wait for price action confirmation signal at the key support and resistance level. But make sure that you are able to do the fundamental analysis very quickly after seeing the economic data or else you will have count heavy loss in news trading. Even after doing all major analysis you might have losing trades during news trading. So always use money management even though you might have the best possible trade setup.

Summary: News trading is often considered to be the task of the experienced professionals. So being new to this industry you should never try to trade the high impact news data with your real trading account. Try to develop your news trading skills by using a demo account to avoid unexpected loss. Focus on the current market trend and use price action confirmation signal for high-level accuracy in your trade execution during a volatile market.