If history has proven one thing about market downturns, it’s that stocks, the investment of choice for most retail investors, take pretty severe beatings. That means that equity-based mutual funds will follow suit and depending on the depth and breadth of the market collapse, bonds and commodities may join in on the fun, or lack [...]
You should know the problem of slippage and how to avoid it if you want to successfully trade the news. Slippage occurs when the price you intend to enter or exit the market is different from your actual transacted price. Currency prices tend to move very fast during highly volatile market conditions. The risk of slippage is usually very high when trading the news.
There are easily 15-20 daily economic data releases relating to the major currencies USD, JPY, CHF, CAD, EUR, GBP, AUD and NZD. Trading news can be a very profitable strategy if you know when and how to enter the market. Forex market react the most to the release of the US economic news.
You should understand the discounting effect in the forex market. Often new traders get confused and ask why a particular currency has rallied despite the negative economic figures about that country. Sometimes, the currency can decline on the release of positive news.
In the world of forex trading, there are no rules or restrictions against insider trading. Anyone who possesses information that is known only to a select few can and do trade that information in the forex market.