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Forex Trading Tips News Trading Method 5 - How to Use the News for Directional Trading

Lets go back to the example of the US forexbonusrebate forexrebatesbrokers earlier, we illustrated what might happen if the data was cashback forex line with or slightly better than expected Now, lets assume the data took a surpr forexdiscountbrokersing dip, what would forex discount brokers do to the dollar? One possible scenario for the dollars movement is a decline in what, is that correct? If the unemployment rate slips, shouldnt the dollar go up? Here are a number of reasons why, even with more people employed, the dollar could still fall The first reason is that the long-term and general trend of the U.S. economy is still on the downside Remember, there are several fundamental factors that could have an impact on the strength of the economy Despite the drop in the unemployment rate, this is still not enough for traders to start changing their overall bearish view on the dollar The second reason could be The second reason for the drop in the unemployment rate may be that the drop in the unemployment rate comes right after the Thanksgiving holiday hiring spike, a time when many companies typically increase hiring in response to the sudden increase in shoppers. This allows you to see whether the job market is actually improving or not. The important thing to remember is to always look back at the overall economic picture before we make a quick trading decision. The first thing you need to do before the report is released is to look at the running trend of the unemployment rate to determine whether it has been rising or falling By looking at the previous trend of the unemployment rate, you are able to have a general view of the future trend situation Assuming that the unemployment rate has been rising steadily 6 months ago, the unemployment rate was 1% and in the last month, the unemployment rate rose to 3% You may now say that you are very confident that employment is continuing to fall and therefore the chances of unemployment continuing to rise will be very high given that you expect unemployment to rise, now you can start preparing to short the dollar in particular, you feel that you can short USD/JPY just before the unemployment report was released, at least 20 minutes ago, you watched how USD/JPY was moving and you noticed that the exchange rate was in a range swing noting the highs and low, they will become breakout points Note: the smaller the range of fluctuations, the greater the tendency for the exchange rate to appear more volatile quotes Since you expect the dollar to go lower, you are particularly concerned about the possible downside breakout quotes for USD/JPY You expect to anticipate that the exchange rate will fall, so the more reasonable strategy you take is to set the entry point at the lower breakout point a line below the level forexbang & nbsp;  >   Forex Academy and set your profit-taking target level at the same level as the breakthrough point range This will work for your trade as you have set up a bearish trading model for the dollar, now all you need to do is watch your trade complete subsequently and you see that USD/JPY reaches the target level you set and you have captured a big profit! Celebrate! The core of making directional trades is that you must fully understand the message behind the news report you intend to trade If you cant understand what impact the upcoming news report will have on a particular currency, then the trade model youve built up will probably be poor
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