VT Markets APP

    FX, 금 등으로 CDF 거래 다운받기

    다운받기

    Simple strategies for trading on news

    March 31, 2024
    source: Canva

    Have you ever noticed that some traders seem to know where the market will move before it happens? They’re probably using a method called “trading based on news.” Think of it as being like a money detective, always searching for the newest information in the finance world.

    Imagine this: You find out a company you’re interested in has just reported great earnings, earlier than everyone else. You buy shares in that company. Then, as more people hear the news and start buying, the price goes up, and you’ve made a clever investment before the crowd.

    In this guide, we’re going to look at how trading on news works, why it’s important, and how it helps you make better decisions in the market. Let’s get started!

    Understanding market news 

    Keeping up with market news is like having a secret advantage when you trade. Here’s a brief overview of the types of news that can really shake up the markets:

    Economic indicators: Watch for important figures like the gross domestic product (GDP) and unemployment rates. These can tell you a lot about the economy’s health and affect how people feel about the market.

    Company earnings: How much profit a company makes can really change its stock price. Good news can boost it, while bad news can drop it.

    World events: Things like elections or trade disputes can change how markets behave. Knowing what these events might do can help you make smarter trading choices.

    Central bank news: Central banks control a lot of financial policies and rates. Their announcements can move markets quickly.

    Checking news source trustworthiness

    With so much news around, it’s key to know what’s true and what’s not. Here are some ways to make sure your news is reliable:

    • Choose well-known sources that report accurately and without bias.
    • Compare stories from different places to make sure they match up.
    • Be wary of dramatic headlines or rumors on social media.
    • Look at the history and expertise of the source in financial news.
    Understanding how news affects different assets 

    Different news affects different assets in different ways. For example, rising oil prices might be good for energy companies but bad for airlines. Knowing which assets will be affected by which news helps you make better trading decisions.

    When news comes out, try to predict if it will make prices go up or down. Also, think about whether its effect will be quick and sudden or slow and lasting.

    Fear and Greed Index sentiment analysis toll
    source: CNN

    Sentiment analysis tools are like magic balls for traders, giving insights into the market’s mood. By understanding the market sentiment, you can guess better how prices might change with the news.

    How to trade with news

    Trading on news isn’t just about following stories—it’s also about controlling your emotions. Here’s how to trade well with news:

    Picking the right time to buy or sell

    Timing is crucial in trading, especially with news. Act fast, but don’t let fear or greed push you into hasty decisions. Stick to your plan, knowing when to get in and out.

    Choosing the right things to trade

    Different news affects different financial items differently. Pick the ones that match your trading style and risk level. Think about how liquid (easy to buy and sell) and volatile (how much prices change) they are to make informed choices.

    Thinking about market changes and risk

    News can suddenly change how risky or stable the market is. Keep these changes in mind when you trade, and be ready to adjust your plans. Stay flexible and don’t risk too much.

    Being patient and disciplined

    Good trading takes patience and control. Stay calm, even when it’s tempting to act quickly, and don’t make decisions on a whim. Accept that losses are part of trading and use them to learn and improve.

    Developing a news trading strategy
    source: Canva
    Making a news trading strategy

    Building a good news trading strategy means combining foresight, analysis, and flexibility. Here’s how to start:

    Personal trading plan: This plan is your guide. Make it fit your risk level, financial goals, and trading style. Set clear rules for when to enter or exit a trade, how to manage risk, and when to take profits to keep your trading consistent.

    Adding news analysis: Mix traditional and technical analysis with news analysis for a well-rounded strategy. Understand how news affects market feelings and prices, and use this in your trading.

    Testing strategies: Test your strategy with past data before using it for real. This helps you see how it might do in different market conditions and make it better. Look at how it does with news events to make sure it’s strong and reliable.

    Always be ready to change: Markets keep changing, so your strategy should too. Be willing to update your approach as things evolve. Regularly check how you’re doing, look at your trading plan, and adjust as needed to stay on top.

    In the end, trading with news is a powerful way to take advantage of market movements caused by the latest information. By adding news analysis to your personalized trading plans, you can move through the market with more certainty. With the right approach, anyone can use news to make well-informed decisions and reach their financial goals in the constantly changing trading world.