The common point of all pro traders’ advice is to stay away from the market when it is about to release news. They have the following explanations. At that time the market is very volatile so it’s not a good time to trade. Or the price which is affected by news will run very fast and it is very difficult to predict. Trading is not a smart move at the moment, etc.
In this article, Olymp Trade Club will have instructions for you to learn more about the economic calendar such as the time when the news is released, strong news or weak news, the impact of news on the price. And from there, you can draw the answer whether should we trade when news appears or not?
- 1 How to read the economic calendar at Olymp Trade
- 2 What is strong news? What is weak news?
- 3 When there is news, how will the market change?
- 4 Take action before or after the news?
- 5 Should I trade when the market has news?
How to read the economic calendar at Olymp Trade
To view the economic calendar, log in Olymp Trade and select the Analytics tab.
The economic calendar will appear and this is when you adjust it to your trading style.
The first is to change the time zone to GMT +0 or your country’s time zone. For example, I am Indonesian, I will choose GMT +7.
Next is to use filters. You hardly need to change anything about the currencies of each country.
You just need to scroll down, tick the box of 2 buffalo icons and 3 buffalo icons. Then press apply.
The last interface will appear. See the exact time frame the news will be released today.
What is strong news? What is weak news?
At Olymp Trade, the importance of news is showed by buffalo icons:
1 buffalo icons: weak news => a small impact on currencies.
2 buffalo icons: strong news => a considerable impact on currencies.
3 buffalo icons: important national news => a very strong impact on currencies.
There is also some unexpected news that can’t be foreseen. For example war news, terrorist news, etc. These kinds of news often have a very bad impact on the economy of a country => The currency of that country will change very quickly.
When there is news, how will the market change?
We often trade EUR/USD and will use this pair to see its changes when there is news about EUR or USD at the 5-minute candlestick chart.
Let’s review the economic calendar on October 25 at 3 pm
3 pm is when news from EUR is released on the market.
EUR/USD currency pair in the morning just fluctuated slightly. Of course, there were some long candlesticks but the price was still in a certain channel. That means the price would never fluctuate too hot (straight up or straight down).
At the beginning of the afternoon, the zone affected by news started to appear. The price fluctuated very strong. It moved up and down unexpectedly.
And this was the zone when the news is released at 3 pm. The price created very unpredictable fluctuations. After the news came out, the price turned back to normal. That means the price had the alternation of red and green candlesticks. At the same time, it created shorter candlesticks than before.
Economic calendar on October 25 at 6:45 pm until 9 pm
From 6:45 pm to 9 pm is the time when EUR and USD took turns to release news.
How did the price fluctuate this time?
The price began to have signs that it moved stronger than before. Exactly from 7:45 pm, EUR/USD started with extremely long 5-minute candlesticks. After that, there were a lot of strong fluctuations in the price. Candlesticks are also more difficult to predict. The price broke down through strong support. Only until the USA officially released the news, the price returned as usual.
Take action before or after the news?
There is a classic saying about the market: “The news reflected all in the price”. That means the price has started to develop a trend before the news appears. This is why you see the price go down and fluctuate strongly before the time release of the news. At exactly 3 pm, a candlestick was closed simply. And then everything went back again. The market rebounded. The same goes for 9 pm. When the news came out, the market returned to normal.
Let’s focus on your attention to the time before the news. This is when the price starts to have strong fluctuations. All technical indicators at this moment are for reference only. If you rely on technical analysis tools to open Fixed Time Trade, it is very easy to lose.
Should I trade when the market has news?
This is probably your question right now. The answer is: Depending on your own personality.
– You are simply a quiet person who likes slight changes in the price. Trading with news is not for you. The key way to trade must be built on Support/Resistance and trend. This is the most effective way to trade at Olymp Trade when the market has no news.
– If you are an enthusiastic person and ready for high-risk games, trading following news is for you. The trading style that follows the market when news comes out and can actively change the way to open Fixed Time Trade when the price fluctuates will be much more effective.