Trading that mirrors news reports is one of the most powerful and effective ways to make money within the Forex market. In the most elementary sense, news is what makes the Forex market move, even more so than trader sentiment. After all, where does trader sentiment come from? Markets do not move in a vacuum, they need real life occurrences to move. So when major news breaks, you can expect that other serious traders are watching and that they will react.
Because news is such a popular trading motivator, dealers will treat this accordingly. In an order for the dealers to make and protect their profits, they will oftentimes widen the bid / ask spread. What was once a reasonable spread will become inflated so that instances of arbitrage or other quick turnaround profits at their expense can be avoided. Another thing to be aware of is the fact that you might get locked out. In other words, because dealers are so overloaded with work during moments of important news releases, they might execute your trade at the moment you specify, but because they are so busy, it might not show up at your computer immediately. This might not seem like a big deal, they made the trade for you, didn’t they? But its effects can be devastating if the market moves against you. A good trade can be lost this way and a bad trade can become even worse. If you can’t see or access your trade, there is no way to protect yourself when it turns sour. Make sure you take a look at all the Forex reviews online to avoid brokers that may not fill your orders. A lot of times this is the reason why you end up switching.