Trade News in Forex & Understanding Volatility – The Complete Guide

Published on November 15, 2021

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Trade with Pepperstone starting today:

Through partnering with Pepperstone, I was able to create a series to help you get closer to your trading goals in 2020! In this episode, we cover how to trade news and volatility in the Forex market. I am joined by Chris Weston, Investment Manager at Pepperstone.

If you want to watch other videos in this series, go here:

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The information provided in this presentation reflects the view of the analyst and does not reflect the opinion of Pepperstone. It is generic in nature and for educational purposes only. Pepperstone does not represent that any of the information provided is accurate, current, or complete and you should not rely upon it when making your trading or investment decisions.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73.6% of Pepperstone Limited’s retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. (Updated Jan 2020)

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My name is Etienne Crete (from Montreal, Canada). I’m a swing Forex trader and help aspiring Forex traders develop a trading method that works for them so they can produce income allowing them to live with more freedom.

I blog at and host the Desire To Trade Podcast. I was fed up with the “fake” millionaire traders and the “get-rich-quick-trading guys”. That’s why you can expect more free content from me than what other people charge for!

If you truly want to succeed in Forex trading, I believe you need to keep working on yourself so you can improve your strengths, but also your weaknesses. Do not focus solely on what you’re good at.

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This video expresses my personal opinion only. Forex trading is risky. Make sure you are ready to trade. Even this will not guarantee you positive results. I am not responsible for any losses incurred due to your trading or anything else. I do not recommend any specific trade or action.

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Trade News in Forex & Understanding Volatility - The Complete Guide, Forex Event Driven Trading Group

Forex Event Driven Trading Group, Trade News in Forex & Understanding Volatility – The Complete Guide.


Spike Failures

Spike “failures” are equally as usual, if not more, than spikes that proceed themselves. The reasoning behind is rather easy: high frequency formulas are trading right off the initial information launch. As the information obtains absorbed, turnaround or extension is identified as traders dedicate.

There’s not excessive to mention below from a technical viewpoint other than the truth of enjoying what happens circa the initial pullback in price.

Volatility Is Not a Toy

Prior to we obtain too far, I’m in fact going to stop. Why? Because I understand this idea can be taken out of context. I wish to ensure I repeat the bottom lines below:

  1. Real spikes that proceed are uncommon. If you’re trying to sell the direction of a spike, please describe this write-up in regards to catching significant pullback retracement points, but make use of extreme care and also be sure to meticulously asses the circumstance well before trading time. Just be prepared and also make use of common sense.
  2. Spike turnarounds are equally as usual, if not more, than spike extensions.
  3. When unsure, stay out. Determining a sharp move in price is one thing, but it is only one part of the equation.

Certainly, among my subconscious objectives for today was to simply elevate recognition regarding how ill-conceived widespread approaches surrounding spike trading can be. Spike trading is possibly the riskiest and also hardest of all kinds of trading, yet for some reason an idea exists that makes it feels like a very easy process.

Even more to find on this subject … still beginning around these components. Thanks for stopping by and also see you quickly.

What relocates the foreign exchange market?

The foreign exchange market is comprised of currencies from all over the world, which can make currency exchange rate predictions challenging as there are several factors that might add to price motions.

However, like the majority of financial markets, foreign exchange is mainly driven by the pressures of supply and also need, and also it is important to get an understanding of the impacts that drives price variations below.

Central banks

Supply is controlled by central banks, that can announce measures that will certainly have a substantial result on their money’s price. Quantitative easing, for example, entails infusing more money right into an economy, and also can trigger its money’s price to go down.

News reports

Industrial banks and also other capitalists often tend to wish to place their funding right into economic climates that have a solid overview. So, if a favorable item of information hits the marketplaces concerning a specific region, it will certainly encourage financial investment and also rise need for that region’s money.

Unless there is an identical rise in supply for the money, the difference in between supply and also need will certainly trigger its price to increase. In a similar way, a piece of adverse information can trigger financial investment to lower and also reduce a currency’s price. This is why currencies often tend to mirror the reported financial health of the region they represent.

Market sentiment

Market sentiment, which is often in reaction to the information, can additionally play a major duty in driving money costs. If traders believe that a currency is headed in a specific direction, they will certainly trade appropriately and also may convince others to follow suit, boosting or decreasing need.

Economic information

Economic information is indispensable to the price motions of currencies for 2 reasons it provides an indicator of how an economy is performing, and also it offers understanding right into what its central bank could do next.

Claim, for instance, that rising cost of living in the eurozone has risen above the 2% degree that the European Central Bank (ECB) intends to preserve. The ECB’s main policy device to battle increasing inflation is boosting European rates of interest so traders could begin purchasing the euro in anticipation of rates going up. With more traders desiring euros, EUR/USD might see an increase in price.

Credit report scores

Financiers will certainly attempt to maximise the return they can receive from a market, while minimising their risk. So together with rates of interest and also financial information, they could additionally check out credit report scores when deciding where to invest.

A country’s credit rating is an independent analysis of its likelihood of settling its debts. A country with a high credit rating is viewed as a safer area for financial investment than one with a low credit rating. This commonly enters specific emphasis when credit report scores are updated and also devalued. A country with an updated credit rating can see its money rise in price, and also the other way around.

The conclusion:

Event-driven trading approaches give a wonderful method to take advantage of boosting price volatility, but there are several threats and also limitations to consider. When establishing and also carrying out these approaches, it is essential for traders to establish limited risk controls while providing enough space for the unstable circumstance to play out in the marketplace. Ultimately, event-driven trading approaches give a valuable arrowhead in the quiver of any active investor.

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