What is News Trading?

Trading and investing are ways to try to increase your fortune and control your financial future in an uncertain world. With job security declining in many traditional industries, it is ideal to have a fallback plan or a side gig to shore up your income. News trading is a great way to get into investing and trading, without the headaches of doing grunt work at a Wall Street firm.

NFP trading can be a lucrative form of news trading, as long as you understand how the non-farms payroll report can affect the market. It is a delicate balance to be able to time trades upon that reports release. The non-farm payroll report is a leading economic indicator for the United States. This is the report that comes out every month and the newscasters are all talking about job growth or lack thereof.

The report calculates the total number of paid workers in the United States, minus farm workers (of course), government workers, private workers in households around the country and non-profit employees. It is looked at as a very broad overview of how businesses around the country are spending their money, hiring and creating jobs or hoarding and cutting jobs.

Trading on this report can be a lucrative venture, but you want to be prepared for some excitement. There is not a lot of wiggle room when you are speculating on currency as the report is released. Trading forex on the news can work in your favor, but you need to be well-equipped to understand all the ramifications of the payroll report and other leading economic indicators.

The report comes out on the on the first Friday morning of the month. For active traders, this is an opportunity to jump on, because the market is going to move in reaction to the report. NFP trading is going to happen. You just need to try to anticipate which way the market is going to go, so you can be on top of the trades. Beyond just anticipating the market, looking at the report with an analytical bent can be the best way to approach this type of trading. Understanding which currencies are likely to be affected and why is an important step.

Being ready as the report hits the wires is important. Looking at either 5 minute charts or 15 minute charts is a good way to start. Letting the NFP report be digested by traders and investors can be lucrative, because it can give you some time to see where the market is about to go, instead of guessing before the market even gets the report. Being ready in your trading platform and staying on top of what is about to happen is vitally important.

Looking the first bar, which is at 8:45, if you are trading the 15 minute charts, will be your jumping off point. Gauge where the market is going to go before you put your money where your mouth is.

No matter what minute chart you are working off of, you want to have your strategy well-thought-out ahead of time. There is no value to trading off the cuff here. You want to avoid making emotional decisions when the time comes to make a trade. You need to have your moves plotted out ahead of time.

Risk management is the other pillar of news trading. Of any type of trading, really. You want to cap your risk by making sure you understand the effectiveness and limitations of stop-loss orders. And you want to be ready to break in a different direction if the market tells you to. The is news trading, not news buying and holding. The Warren Buffett strategy will get you nowhere in the trading game.

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