It's common for CFD traders to consider other sources of information outside the chart. Popular ones include financial statements, industry profiles, and annual reports.
However, market news is arguably the most important for informed trading decisions. It refers to updates impacting financial markets, such as currencies, bonds, and stocks.
Market news can include breaking announcements, financial analyses, or commentary on market conditions.
For example, assume a headline read, "Federal Reserve announces interest rate hike." It is a breaking report that will affect almost every asset class because the cost of borrowing money will influence investments.
Today, you can easily access market news via websites, social media, TV and radio broadcasts, newspapers, etc.
Importance of Following Market News
Fundamentalists already understand the need to keep up with market news. Hence, It is among their several essential tools for predicting market movement.
Conversely, pure technical analysts pay little attention to them. They believe price actions will always repeat and provide trading opportunities.
However, it isn't the best decision because you could miss the following benefits:
Improved Understanding of Price Movement
Prices in the financial markets move due to the impact of real-world events. They could be economic, political, social, or natural.
Therefore, following significant events on market news will give you a deeper understanding of price moves. You won't see prolonged trends or high volatility as random.
Generally, when market news is positive in a country and improves the economy, there will be increased demand for its currency. Hence, it should result in bullish markets.
On the contrary, the conditions will be bearish when events are unfavorable.
Other market classes have various ways they react to different reports. Hence, research and study past behaviors to have a future outlook.
It Helps You Anticipate Short-term Volatility For Scalping
Usually, financial markets become highly volatile after a piece of high-impact breaking news. The price can move in any direction for a few minutes to several hours within the day.
Therefore, scalpers and day traders can turn the fluctuations into profitable trades.
There is no general rule to partake in this but to react to such reports quickly.
For example, major currency pairs become highly volatile immediately after Non-farm Payroll (NFP) report. It will sometimes cause price gaps and sudden large swings until that trading day ends.
Hence, the goal will be to anticipate these events and analyze how the report could impact price.
Also, unexpected breaking news like natural disasters or terrorist attacks can increase price volatility. Hence, always be ready for them whenever trading.
Identifying Long-term Trends for Position Trading
Just as some news reports help short-term traders find profitable opportunities, long-term traders can use them to determine directional bias.
Understanding a significant news impact will signal macro-directional trends. Hence, swing and position trading decisions will be easier to make and backed by logic.
Some examples of such high-impact events include the following:
● GDP Output: The Gross Domestic Product report gives information about a country's economic status.
If it is much stronger than the forecast, traders may expect bullish market conditions because the economy is growing. The opposite is also possible when it is much weaker than expected.
● Elections: Election results can lead to several policy changes, affecting different industries in many ways. Studying their nature can provide insights into a possible market trend.
● Geopolitical events: Disputes or agreements between two or more countries can also affect their economies.
You can expect a market response if the event is significant. Some examples include a reduced commodity supply (like oil) or localizing production.
Enhanced Risk Management
When there's an upcoming breaking news that could be significant, you can strengthen your risk management techniques.
It will protect you against possible losses from increased volatility, prolonged retracements, or complete price reversals.
For example, when you're expecting an NFP report, you can use any of the following safer strategies:
● Close existing trades if they are already considerably profitable
● Reset your stop loss and take profit order levels
● Avoid opening new positions for the period.
The Must-Follow Market News Categories to Remain Informed
In reality, it's almost impossible to keep up with every market news available.
Major ones will disrupt almost all asset classes. However, others may only cause volatility briefly in one market.
The key to selecting the best reports to follow depends on several factors, such as:
● The news relevance and impact
● Your preferred financial market(s)
● Your trading time frame, e.g., Scalping, day trading, position trading, etc
Regardless, these are the most significant types of market news to consider:
Economic News
Implied by its name, economic news reports are announcements about a country's economy. They usually share info about its increased or reduced strength, which can guide your trading decisions.
Some examples of these reports include:
● Gross Domestic Product (GDP): GDP measures the value of goods and services produced within a country. It is released monthly, quarterly, and annually.
Usually, a higher GDP signals a better economy, and vice versa.
Therefore, it can impact government policies and investor sentiment significantly.
● Employment rate: A country's employment rate also gives an overall view of its economy from the labor market. Non-farm Payrolls (NFP), JOLTS, Initial Jobless Claims, etc., are helpful indicators you can look out for in the news.
● Inflation: An inflated economy generally discourages more investments, affecting the markets. Hence, following the news will keep you updated on such developments.
● Retail sales: Another significant economic driver is consumer spending, and retail sales reports will provide insights into it.
● Industrial production: Tracking the news will keep you updated on the country's manufacturing sector. Its impact on the overall economy may differ by country, but it is usually significant.
Economic news typically impacts the Forex and equity markets.
Earnings Reports
Earnings reports are official documents of a company's financial performance. Firms release them at intervals (typically every quarter).
Therefore, they are significant to potential investors and CFD traders interested in shares and indices.
True, you can get updates on earnings reports from several sources. They are on company and SEC websites, trading platforms, and social media channels.
However, the news is one of the best options.
You won't only receive the reports quickly, but usually with detailed analyses from top financial experts.
Well-known experienced news providers will give an unbiased opinion about them, saving you much time to make fast decisions.
For example, assume you read this news headline about Apple's earnings report - "Apple's Q4 Earnings Beat Expectations with Record Revenue of $111.4 Billion."
You can already tell the company significantly improved without looking at the report. It will help you make immediate trading actions.
Political and Geopolitical News
Global markets also feel the impact of political and geopolitical events. Hence, related news should interest you as a trader.
For instance, elections are usually uncertain times in a democratic country, especially when there is no clear favorite. It can affect investor sentiments, increasing price volatility during the period.
Later, there will be a winner who may bring new (favorable or unfavorable) policies that may further impact the financial markets.
If the new leader also partakes in wars and conflicts with others, it may disrupt the supply chain, affecting related companies' stock prices.
Other examples of political and geopolitical news to follow include:
● Referendums
● Military actions
● Trade/tariff deals
● Brexit/EU developments
● OPEC agreements
Central Bank News
Following central bank news reports is also essential if you are a Forex, share, bonds, or equity trader.
The institution usually hopes to improve a country's economy by altering monetary policy and interest rates.
For example, you may receive a news report that the Federal Reserve has increased interest rates due to rising inflation. It should reduce spending by discouraging fund borrowing.
Hence, the following are the consequences in financial markets:
● Forex: The country's currency will increase in value.
● Stocks: Stock prices may likely reduce.
● Bonds: Existing bond prices will fall while new ones with higher yields will rise.
The opposite can also be true when news reports reveal a decrease in interest rates.
Breaking News
Sudden unexpected events can also affect the financial markets.
They may temporarily increase intraday volatility. However, serious activities may influence prices for several days to weeks.
Luckily, if you follow market news from consistent providers, you may be among the first traders to learn of such events.
It will help you quickly hedge against potential losses that could've blown your trading account.
Examples of unexpected events you may discover in the news include the following:
● Product launches from top companies
● Natural disasters
● Vandalism or theft
● Insurgency
● Pandemics
● Corporate scandals
● Technology changes
● Mergers & Aquisitions
Where to Keep Up the Latest News to Stay Informed
It's one thing to understand the importance of market news; it's another thing to find a reliable source.
A news provider should be consistent and reliable. In addition, it must deliver the latest updates as soon as possible.
Any misinformation, delay, or biased reports can significantly affect your decision-making.
Hence, the following are some popular market news sources that top traders/investors consider today:
Financial Websites
Financial websites are some of the most consistent news providers. They report market-moving stories as they break, giving you an edge against unfavorable trading conditions when present.
Some of the most popular ones include:
● CNBC: CNBC is highly popular among investors for its real-time news, analysis, and objective commentary on the financial markets.
● Bloomberg: Bloomberg is a leading financial news provider that covers reports on currencies, stocks, bonds, and commodities.
● Reuters: Reuters is another excellent option for in-depth market reports and analyses on every top market class.
● Financial Times: Financial Times covers information about the global financial market, from breaking news to informed commentaries on significant events.
● The Wall Street Journal: Traders and investors also use The Wall Street Journal for real-time market news and data about the markets.
There are also several similar sites, like Yahoo! Finance and MarketWatch.
Social Media
Social media has become one of the fastest means of communication. Thus, you can get breaking news that may impact the markets quickly.
It may be from any of the following:
● Significant figures, such as economists, politicians, or world leaders
● Groups, including communities and topic channels
● Organizations like a Fortune 500 company profile
● Trends
● Financial news providers
For example, unfavorable news reports, like warfare, will spread quickly on social media. Hence, you may be among the first to expect a significant market impact.
Economists' posts have also been helpful, especially when a market-moving report is approaching.
Regardless, social media has become a nest for false information. Therefore, ensure you verify every major update to prevent wrong decisions.
News Calendars
If you've been trading for a while, you've likely looked at news calendars for informed decisions. They are highly reliable and easy to use, especially for beginners.
An economic calendar shows release forecasts with their date and time. They can include indicators for unemployment claims, GDP output, consumer spending, etc.
By anticipating such events days and weeks earlier, it will prepare you for sensitive periods when the market may become more volatile or trend longer.
Some calendars providers even share valuable tips and analyses in forums with top economists discussing possible impacts.
Regardless, understand that news calendars mainly provide official, anticipated forecasts. Hence, there's no guarantee of getting breaking news.
Broker News Feeds
Several brokers now provide live market updates for their traders. Hence, there'll be no need to leave your trading platform on many occasions.
Since they get the information updated from top media outlets, you can trust them for your trading decisions.
In MetaTrader 4, such feeds are in the news section on the Terminal tab. They are often simple and short headlines.
Regardless, they can be helpful if you already understand their nature and expected impact.
Other trading platforms even provide a forum for experts to discuss and share their opinions.
As a new trader, such expert views are valuable.
News Apps
Like news websites, you can download related streaming apps for live market-moving information.
They are highly convenient, especially when you can't access your computer. Moreover, their push notification setting will ensure you get the fastest updates.
These apps have become so popular today that almost every top financial report provider has one. Traders widely use Bloomberg, CNBC, Reuters, Yahoo! Finance, and MarketWatch applications.
One setback from this news medium is the possibility for program bugs to alter with the reports. It may delay or fail to load updates at sensitive periods of market impact.
Moreover, some apps may not work on selected mobile phones for different reasons. Thus, ensure your interested one operates well without malfunctions.
News Blogs
Bloggers also dedicate their platforms to market news and analyses. Depending on the blog, you may get breaking updates, detailed forecasts, and live commentaries.
Some examples of such blogs include Business Insider, Investopedia, and The Penny Hoarder. You can also enjoy quick and thorough market reports from industry experts on
VSTAR blogs
If you enjoy them, subscribe to receive timely emails and turn on notifications when possible.
Strategies for Responding to High-Impact News Events in Financial Markets
The main reason for following market news is to make informed trading decisions. Hence, every high-impact event demands some reaction.
It may seem challenging to beginners who are yet to experience such conditions. However, below are some common expert strategies to consider:
Guage Market Reaction and Direction
High-impact news will always cause a brief or prolonged response from markets. Thus, understanding such reactions by close monitoring is essential.
Before the report, study the chart for patterns, trends, or reactions to sensitive levels to have an expectation. Technical indicators can also help you gauge the price's next probable direction for better decisions.
If you have access to market experts, mentors, or senior traders, you can discuss with them for more insights. They will help you understand the overall market sentiment and how to read the upcoming news.
For example, if the currency market has been bullish, an update of increased GDP may strengthen the trend even more.
Look for Trading Opportunities
Although experts may advise staying off the charts after unpredictable high-impact news, it's also okay to seek trading opportunities sometimes.
For example, scalpers may enjoy the volatility NFP reports cause in the Forex market. Having profitable trades is easier and quicker from strong moves than slow-ranging ones.
However, the chances of losing are also higher in such conditions.
After high-impact news, consider waiting to know the market strength direction. It will help you find profitable entries and exits while sticking to your trading plan.
Tighten Stop Losses or Take Profits
As discussed, high-impact news can be unpredictable and cause high volatility. Hence, it's essential to strengthen your risk management techniques.
One of the best ways is by adjusting your stop loss orders to reduce your potential loss. It is a vital move, whether on an existing trade or one you plan to take after the news.
If you have a trailing stop present, also consider tightening it to secure more profits.
Unfortunately, you may still experience slippages if the news release is highly impactful. Thus, consider closing your trade(s) earlier or moving the take profit(s) closer to your entry point(s).
Securing profits is always better than bearing a loss.
Reassess Market Bias
High-impact news can entirely shift market sentiment in several asset classes. Hence, you may need to re-evaluate the trend bias for better trading decisions.
Most times, the shift will depend on the nature of the news (whether positive or negative).
A global health crisis is one example that is usually negative. It affects supply chains and consumer behavior significantly. Therefore, the stock and commodity market should feel the most impact.
On the contrary, the economy is better when GDP rises beyond expectations. Hence, the currency should shift from any other condition to a strong uptrend.
Consider Fundamentals Over Long Run
Pursuing every short-term move after high-impact news is not advisable. Instead, revisit fundamentals to understand the sustainable trend over days and weeks.
Then, trading in that direction will be at lower risk, especially when you're confident about your analysis.
Some news reports may have a short-term effect of increased volatility or retracement. However, the market still corrects itself in the underlying long-term trend.
Ensure you never decide against your trading plan and higher time-frame trend because it can be tempting during these periods.
Stay Flexible
Before or after significant market news, prepare to be open-minded to any conditions that will follow.
Your expectations from deep research and analysis may play out. However, even the most experienced market analysts fail to make forecasts correctly.
Understanding that anything can happen and staying flexible will protect you from wrong, emotion-driven decisions.
For example, higher interest rates and improved GDP will not always cause currencies to skyrocket immediately. Conversely, other factors may prevent them from bearish markets when inflation rises.
Based on your trading plan, adapt to whatever market conditions you read (not what your feeling tells you).
Conclusion
It is always important to follow market news for more informed trading decisions. You will understand price moves better, be it short-term volatility or long-term trends.
Economic reports, central bank news, and political events are some categories with the most impact. However, breaking news like corporate scandals and product launches can disrupt the market.
Wherever you receive such reports, like financial websites, social media, and news blogs, ensure it is high-quality. Top sources are consistent, unbiased, and constantly updated.
You can react to any release by any strategy shared in this article, including tightening your stop orders and staying flexible.
