How do News Releases Affect Forex?

When the government releases the monthly, quarterly, or annual reports of the above mentioned factors, there can be an effect on the movement of the currencies in the forex market. Before the government makes the releases, a general expectancy of what the values can be are studied by some institutions which give an expected range in which the value
released by the government should be. When the government makes the release and this value falls within the expected range, the effect it has in the market is very low, almost inexistent. On the other hand, when the value released by the government falls outside the expected range, the market gives an unexpected turn, usually catching traders of guard and
turning their winning trades into loses.

Many traders think that it is better to stay outside the market when important releases are expected. By doing this, they avoid getting caught by a quick and violent turn of the market. If a trader decides to trade the news, he must be very careful and follow a trading strategy strictly. By following a set of entry and exit rules, he could avoid having a big loss if the market move is in the opposite direction he expects, but he could also make a lot of money by scoring a big win. At the end, it depends on the trader’s strategy and his personality to trade or stay away of the market before a news release, although a vast majority of experts recommend avoiding opening positions and entering the market.

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