Trading economic news releases is one of the highest-risk styles of trading in the forex markets. While EFX will never discourage anyone from trading with us based on any style of trading, Traders should be aware of the fast market during the news announcement and should keep expectations realistic.
Because we are not a deal desk, our platform depends on liquidity provided by some of the largest banks in the world. Just like a retail trader wants to “catch” a spike on news, banks may not want to be buying and selling at prices half a second before the market is trading at a substantially different level. Therefore, it is possible for the banks to “lighten” the liquidity that they are displaying ahead of major economic numbers that include, but are not limited to, the US CPI, Non-farm Payrolls, and Trade Balance numbers, which come out monthly. During the seconds after a news release, all banks are scrambling to react to the news just as much as a trader would be. Therefore, the ability to get a fill can be severely compromised in some instances.
Our belief is that people trading on news need to have realistic expectations about their chances. Therefore, understanding the difference type of orders could be helpful during the time of major news releases. For example, a market order is an order for immediate execution at current market prices. With a market order, an execution is guaranteed; however, the price is not. Once the order is placed, the customer has no control over the price at which the transaction is executed. In fast-moving markets, the price paid or received may be different from the price quoted.
A limit order is an order to buy or sell a security at a specific price or better. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher. With a limit order your order may never be executed because the market price could quickly surpass your limit before your order can be filled. The benefit of using a limit order is that you can protect yourself from an unfavorable fill during a fast market
If you wish to learn more about how to use our wide array of order types to your advantage, consider viewing one of our on-line webinars (link to Webinar page), viewing our order type tutorial (link to Tutorial page), or contacting our customer support team to walk you through them.
News trading is a high-risk endeavor. While we have created a platform that is designed to make active trading possible, you cannot get a fill where no fill exists in a true market. Please consider this when placing trades.
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