Day Trading Forex: 2 Factors You Should Consider

One of the most widespread methods to earn money with forex day trading is trading the forex news. That is, opening short term trades based on latest fx trading news reports. Yet, as most forex traders know, this is a very risky trading method and it is easy to get trapped into a losing position. You could use a good Fx trading software like Forex Autopilot (see FAP Turbo Review ) or the new Ivybot for normal trading. Day trading needs But the day trading according to forex news is different}. In this guide we look at 3 essential factors that you must take into account if you want to profit from day forex trading  according to forex news.

1. Market Sentiments
Failing to take market expectations into account is a common fault in reports based day trading. Let’s see this with an example. Let’s say there is an forthcoming broadcast of US trade figures. According to you this announcement to be beneficial for US dollar, so you start a trade just before the declaration goes live.

However you forgot to take into account the fact that the forex market by and large was expecting this announcement to strengthen the US dollar, hence in fact, the price movement has already been happening slowly in the days prior to the report. When the report is live, there will be big price movements only if the report is drastically different from expectations.

That means that your trades will be profitable only if the announcement is much more encouraging than everybody estimated. If the announcement statistics are good but not as advantageous as expected, the USD might plunge since the market outlook ahead of the announcement were very high. So you possibly will in fact lose your investment.

2. Slippage
Next factor is slippage. Slippage is the difference between the price you wanted to get while placing the trade and actual price that your trade gets filled at. Slippage depends on the broker to some extent, but at the time of an announcement everyone can get affected simply because the price in the market changes in every second.

For example if you are not sure of how an announcement will go but you are doing in foreign exchange day trading and you are hoping a breakout one way or the other, you might place an order to open a long trade if the rate goes up to a certain point, say 1.2010, along with a corresponding instruction for a short trade if the rate falls.

However, you could be in danger if the price unexpectedly jumps ahead of your trigger. Say it goes up to 1.2040 . In this condition you will possibly find that your order has been filled at a higher price than you considered, say 1.2025. If the price then drops, as it often does after a spike, it may settle back at 1.2020. If your order had been filled at 1.2000 that would be fine, but at 1.2025 it is not. So slippage is one more factor that can can cause losses in forex day trading if you are not vigilant.
You can see a more detailed guide on forex day trading here.