New Delhi [India], September 12: Forex traders must keep an eye on everything that happens globally, as well as any data and news released, because it can affect them and their investors. Economic releases are scheduled reports that provide in-depth information about the economic health and performance of an economy or significant investment sector.
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Economic releases can cause extreme volatility, which leads to massive price swings. Investors who know how to leverage them can profit handsomely, but there is also potential for losses. Additionally, different market hours can affect how investors take advantage of economic releases because they affect different regions differently. In this article, we will look at several strategies forex traders can use to be profitable during economic releases.
Know When to Leverage or Avoid Weekend Trades
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Trading platforms and exchanges will refresh their trading rates before the first opening of the week to allow market adjustments and to ensure everyone has the current market pricing. They may choose to execute some trades made during the weekend but will not execute trades placed during the adjustment.
There is potential for leveraging economic releases here because traders can place orders to take advantage of price movements. Since their orders will be executed before the market opens and thus adjusts, they can profit that way.
A crucial benefit of using this strategy is that traders can cancel or modify existing orders after the opening if they do not like their trades.
Follow Trends Across Markets
Forex traders can also follow trends across markets to leverage movements caused by economic releases. Forex is a 24-hour market, with traders subject to trading during different forex market hours depending on where they are and the markets they are interested in.
The Asian session (Tokyo) is usually the first forex market to open. The European session (London) is second, followed by the North American session (New York). The Asian session is characterized by tight forex pair groupings, and traders should use support and resistance levels to execute profitable trades.
Once the European session opens, there are opportunities for breakout trading due to the increased volatility. The best currency pairs to trade during these breakout sessions include USD/JPY, GDP/USD, and EUR/USD.
For the cautious investor, the best strategy is trading during the overlap when the European and North American forex markets are open at the same time. This overlap causes increased liquidity, smoothing out trends and prices.
Scalping for Late North American and Early Asian Sessions
Scalp forex trading is a strategy where traders hold currency pairs for a short period and execute small, quick trades. Everything starts settling down as the effects of an economic release die down depending on how impactful it was.
As this happens, the Late North America and Earlier Asian sessions experience low liquidity and wider spreads that can be more exaggerated than usual. These conditions make trades riskier, meaning you should avoid trading major positions at these times. However, careful traders can use scalping techniques and extensive data analysis to execute profitable trades.
Educating yourself on what is happening in the forex market, the upcoming economic releases, and how they will affect the market is crucial to being a successful trader. In addition, you should know how to leverage trading hours and sessions around the world to enter the best forex trading positions.
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