Trading news for beginners How to identify and trade news categories – Admiral Markets | Jewelry Dukan

Think back to an incident when you were surprised by unexpected news. For better or worse, the news came as something out of the ordinary and prompted a reaction that set off a chain of events to cope with the news or adapt to new circumstances.

In short, we are talking about change. Change is the catalyst that makes trading and investing markets dynamic and full of opportunity. With change comes risk and the need to research trade news to stay current with the latest information. Being able to quickly adapt to change and stay on track to meet your financial goals is a skill in itself.

Changes in trading news are what drive markets up and down. Traders and investors are adjusting to new signals from financial leaders, among others. Economic developments and statistical results from the analysis area also influence trading and investment decisions.

Some changes are completely unexpected and may shock market participants. Other changes come in the form of economic releases scheduled on a forex calendar. These follow a regular monthly or quarterly pattern. Even these regularly scheduled releases can contain market-moving surprises.

So, what are the different trading news categories and how are they traded?

Recurring business news

Recurring business news appears regularly every month, quarter or year and is a status update of the economy. Recurring messages are divided into many different subcategories, some examples are given below.

News by economic sector

An economy is like an engine, and the different parts of the engine are made up of economic sectors, each contributing to the power and speed of the economy.

A Purchasing Managers’ Index (PMI) is an important benchmark and measure of performance in the services and manufacturing sectors, which are immensely important to any economy. PMI surveys are released monthly and annually for comparison purposes and give traders insight into the strength of the economy.

Retail sales, consumer spending, durable goods orders and consumer confidence reports are another high priority. Traders should pay attention to these reports to understand whether the economy is growing or contracting. These benchmarks also show whether consumers are willing to spend on their everyday needs and desires, or whether they prefer to save their money for bad times due to uncertainty about the state of the economy.

Consumer spending is closely linked to the labor market, a sector of high macroeconomic importance. The unemployment and employment rates are a key indicator for traders to understand whether the economy is strong, weak or stagnant. If jobs are plentiful, consumer spending is likely to be healthy. When unemployment is high, the reverse is the case – consumer spending falls, which impacts corporate profits.

The import and export sector is another sector to watch closely. The reports from this sector show the health of trade relations with other nations and the strength of the national currency. When the national currency is weak, other national currencies have stronger purchasing power due to the corresponding exchange rate and exports increase. Foreign and domestic currency flows are vital to the health of an economy as they bring cash to the manufacturing, service and financial sectors.

The housing and construction sector is closely related to confidence in the economy and reports from this sector are snapshots with other sectors in the background: cement plants in manufacturing; wood yards at the wood market; and all other raw materials needed to construct houses and other buildings.

Last but not least, tourism and travel are on our short list of important industries. If you have any doubts about this, consider that in 2019, just before the COVID-19 pandemic, tourism and travel accounted for $9 trillion of global GDP, around 10 percent overall. In 2021, this fell to $5.8 billion due to travel restrictions, a significant drop in sales and profits for tourist and business travel destinations.

Reports, surveys and statistics from any of the above sectors are likely to affect trading markets and the value of national currencies.

GDP growth news

Gross Domestic Productivity (GDP) growth reports are the kings of economic reports, influencing trading decisions when there are any upside or downside surprises. Governments release GDP results quarterly, semi-annually and annually and the results may affect the value of national currencies.

News from central banks, the public fiscal sector and the financial sector

Statistics from the banking sector, the broader financial sector and the fiscal sector are essential metrics to understand how well the financial system and price stability are functioning. These metrics have the following form:

  • interest rate levels
  • price inflation levels
  • Amount of foreign exchange reserves
  • credit defaults
  • Amount of borrowing and loan repayment
  • national debt and public debt

How to trade recurring messages

The value of a national currency relative to other currencies summarizes the state of a nation’s economy. The EUR, for example, symbolizes economic output, central bank policy and a variety of complex financial processes in one number. The number is constantly changing depending on the different reactions to the latest news in the trading markets.

Daily press releases can be overwhelming and it can be difficult for the beginner to decide which ones to trade. Therefore, the Admirals forex calendar divides the priority levels into low, medium and high priority, each denoted by a different color.

How these news events are traded depends on each trader’s risk tolerance, skill level, and financial goals. So one option is to join our webinars and watch experienced traders analyze recurring live market events and then practice different strategies on a demo account. This approach would help you get acquainted with the inner workings of the forex market.

Unexpected news

Unexpected news comes randomly and always seems to come at inopportune times. Unexpected news events include geopolitical events such as wars, political unrest and disruption, global health emergencies such as COVID-19, and economic shocks such as Brexit.

With any change, a trader must quickly adapt to unexpected events. One of the best approaches is to learn as much as you can about managing risk.

While many brilliant traders have adapted to unexpected events with new ideas, beginners should take it one step at a time and make sure you have a backup plan in place in the event of market volatility.

In summary, it pays to take the time to read the news daily, check the Admirals forex calendar to prepare for upcoming events, and understand the difference between recurring and unexpected trading events.

Admirals offers a wide variety of educational and analytical webinars. To meet and interact with experienced traders, join our free webinars!

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This material does not contain, and should not be construed as, investment advice, investment recommendations, an offer or solicitation of any transaction in any financial instrument. Please note that such trading analysis is not a reliable indicator of current or future performance as circumstances may change over time. Before making any investment decisions you should seek advice from independent financial advisers to ensure you understand the risks.

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