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  1. #1
    Senior Member Annovdbos's Avatar

    News announcements and how they affect different pairs !!!

    Hey everyone!

    I've been reading some articles about fundamental analysis lately. I just want to know how it all works. Because if I look at a forex calender there's all kinds of news announcements, but I have no idea what it all means and which are significant and which aren't. Neither do I know how the outcome of such news event will affect the pairs. I just want to know a little more about this subject of trading, so I understand and know what to expect.

    So, I made a couple of tables based on this article/lesson: http://www.straightforex.com/basic-f...rs-by-country/
    Probably it's not as simple as I've written it down. I've presumed that if, for instance the USD will strengthen due to let's say an increase of the GDP, USDJPY will increase and EURUSD will decrease. Simply because USD is the base currency in USDJPY and USD is the counter currency in EURUSD. Now, I don't know if this is how it works or not? I'll present my tables here and I would appreciate if someone could tell me here if I'm in the ballpark or not. If not, then please explain how it does work. I'd love to know what all these news announcements do to the different pairs! Thanks in advance!

    Here are the tables (it's selected by country. So if it's the 'Australia table' for instance, then the CPI in the table is the CPI of Australia):

    Click image for larger version. 

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    "You think I ain't worth a dollar, but I feel like a millionaire!" - Queens of the stone Age

  2. #2
    Legendry Member Okane's Avatar
    Good effort! So how do you define what's week and what's strong and
    why would this be better than just watching a calendar like forexfactory where I can see
    their forecast and the actual outcome plus previous number but also whether the numbers coming will be better for a currency or not?

    Not saying it's bad what you have done, it's just me who doesn't get it. If you could explain how you intend to use it for example, that would be great!


    Let me give you an example of how I would just get my info from the news calendar:

    I know there will be... hmm for example, next week on Monday there is German Ifo Business Climate which is
    expected to be high impact news. It will affect the EUR according to the calendar. The recent numbers have all been green = good for the Euro!
    There is no forecast as of now (guess it's too early but they will probably announce a forecast on Monday before the data release)
    So from what I see:
    http://prntscr.com/fmkc3v

    The recent times it has been positive and if the actual data that will be released on Monday is good = higher than forecast it will be good
    for the EUR meaning it will strengthen EUR vs USD meaning EUR USD should rise, go up!

    Now, what I can do is some more research, meaning go back and look at all those previous green numbers and see what happened to the EUR USD
    when those numbers came out! Did the currency pair rise? How good did the numbers have to be in order for the EUR USD to make a decent climb up?
    This way I can have some clues about what is expected - Hope this helps!
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  3. #3
    Senior Member Annovdbos's Avatar
    Quote Originally Posted by Okane View Post
    Good effort! So how do you define what's week and what's strong and
    why would this be better than just watching a calendar like forexfactory where I can see
    their forecast and the actual outcome plus previous number but also whether the numbers coming will be better for a currency or not?

    Not saying it's bad what you have done, it's just me who doesn't get it. If you could explain how you intend to use it for example, that would be great!
    Thanks for the relpy!

    Well, this is NOT meant to replace the forex calendar. It's more meant to help read the forex calendar. What I'm having trouble understanding is which pair moves up and which pair down after a news release.

    Like in your example the euro strengthens and then the EURUSD rises. But let's say the news release is a CPI release of the USD for instance. The CPI turns out to be higher than expected and that means the US economy is doing well, so the USD strengthens. Does this mean then EURUSD would fall? Because the EURO is the base currency and USD is the counter currency? Or doesn't it work that way?

    To make it a little clearer: Hypothetically, if there was a USDEUR pair and it would react to the same news release, this pair would rise right? So, if USDEUR pair would rise would EURUSD ALWAYS fall down or are there any exceptions in this? So that both pairs (EURUSD and USDEUR) would rise or fall?

    Another example to make it a little clearer for me:

    Click image for larger version. 

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    This is a news announcement for the CAD CPI for this friday. Now, let's say actual will be better than the forecast. This means it's good for the CAD. Would that mean USDCAD drops because CAD is the counter currency in this pair?

    If this is the case, then these tables are accurate and will help me better with reading the news and especially how pairs will react to it. Yes, it's shown on forexfactory that when something is good for a currency and when it's not. But, if I write things down like this (summarize it) I remember it better and I understand things better. It's the same with studying for a school test for example. If you need to learn a book with like 300 pages, you're never gonna learn everything by just reading it. But if you summarize everything, you'll remember it better AND you'll understand it better. That's what this is as well, I summarize the article/lesson I mentioned earlier and by doing that I visualize what could happen to the pairs when a news announcement is released.
    "You think I ain't worth a dollar, but I feel like a millionaire!" - Queens of the stone Age

  4. #4
    Legendry Member milos's Avatar
    Positive economic data for primary currency includes call option. It needed put option for secondary currency.

    Negative economic data for primary currency includes put option. It is needed call option for secondary currency.

    Hawkish speech for primary currency is required call option. It is needed put option for secondary currency.

    Dovish speech for primary currency is required put option. It is needed call option for secondary currency.

    What is primary currency of USD/JPY?
    USD is primary currency while JPY is secondary currency.

    Positive data for USD
    CALL STRATEGY on currency pair USD/CHF, USD/CAD, USD/JPY
    Trading the news strategy is included the following

    PUT STRATEGY on currency pairs EUR/USD,GBP/USD, AUD/USD, NZD/USD

    PUT STRATEGY on gold, oil and silver

    CALL STRATEGY on S&P500, Nasdaq, Dow Jones and US stocks

    PUT STRATEGY on DAX30, FTSE100, CAC40

  5. #5
    Senior Member Annovdbos's Avatar
    Many thanks for the explanation Milos! It's very clear now!
    "You think I ain't worth a dollar, but I feel like a millionaire!" - Queens of the stone Age

  6. #6
    Legendry Member milos's Avatar
    Quote Originally Posted by Annovdbos View Post
    Many thanks for the explanation Milos! It's very clear now!
    You're welcome Anno.

  7. #7
    Legendry Member Okane's Avatar
    The price is a quote. As I mentioned on Skype, think about them in numbers: 1/1
    I think this is the part you missed, EUR / USD means EUR price divided by the USD. Or any other asset!
    For example USD JPY means USD divided by JPY. This is why the price is a quote and we sometimes call it quote instead of price.

    Then what happens if one number increases (read: one asset strengthens vs the other?)

    After this it's simple math: 1/2 = 0.5 => so what does this mean if we change numbers into EUR/USD? US was stronger so 1/2 is less than 1/1 which means the pair goes DOWN right?
    2/1 = 2 => so what does this mean if we change numbers into EUR/USD? Eur was stronger so 2/1 is more than 1/1 which means the pair goes UP this time.
    Now you can do this with any asset and assume good data for either the base currency or the counter currency.

    Basically it's a simple division, that's all. Therefore, if you think of it as a division (which it's all it is) you think
    what happens of the denominator increases in a division? The answer gets smaller, the higher the denominator the smaller the answer.
    Right? 1/2= 0.5, 1/10= 0.1. See? Therefore, with EUR / USD, the stronger the USD gets the lower EUR falls. Or if EUR gets weakened like during Brexit.

    And what happens if the numerator (base currency) gets stronger? For example EUR JPY. Then Obviously: 2/1 = 2, 2/0,5 = 4... see, price should go up.

    Now of course sometimes you may think a news outcome is good for a currency but the FX traders just push the price in the opposite direction.
    This is more complicated and can depend on various things like perhaps they already traded that news due to earlier sources and we don't know about that.
    Or just that the numbers were not as strong as they hoped so they dump the price instead of pushing it up...
    Last edited by Okane; 06-23-2017 at 10:09 AM.
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  8. #8
    Moderator Kolyo's Avatar
    Hey Anno,

    Great discussion here and it will be very helpful to all traders new in fundamental data! Your tables are totally correct. I think you already understood the basic principle which pair move higher/ which lower in case of positive/negative data for particular currency. Actually we are always trading the first currency against the second. That's why if the news is positive for the second currency than the pair will go down.


    These are the basic assumptions. Of course the world is not working this way. It would be too simple and easy haha if it was just as simple The market is reacting actually to the difference between the actual number of the released data and the already expected from the crowd. Than you can ask, how can I know what the crowd is expecting, right ? It is not that difficult. First you have the expected number most often in the calendar. You can read news information where it is often stated what is the current expectation for the future interest rate. I can't explain here in two words. It need more to be properly explained, but in every single moment we have very accurate data of the market expectations on the interest rate differentials. Thus we know in advance for example are the markets pricing in interest rate hike or not.

    For me trading interest rate decisions is one of the best, predictable, straightforward and high outcome setups that we can have in trading. The only problem here is they are very rare, so you can not rely on trading only them.
    If it is already expected and than Boom it happened exactly as expected - Than what you should be expecting to happen? Most probably it will happen exactly the opposite to what your tables are telling or the reaction will be mixed and will make it impossible to trade at all. That's why we are searching only for those rare opportunities when the market is expecting something but it happened something else, than everything is clear and there is a short period of time when you can trade with great certainty! That's it
    "The goal of a successful trader is to make the best trades. Money is secondary." - Alexander Elder

  9. #9
    Moderator Kolyo's Avatar
    Btw if you want chart of a reversed trade, for example JPYUSD instead of USDJPY go to TradingView charts and just type JPYUSD and it will appear. This is the only charting tool I know that can prepare comparison chart exactly as you wish. Look at this one for example:

    http://prntscr.com/fn7zpq
    "The goal of a successful trader is to make the best trades. Money is secondary." - Alexander Elder

  10. #10
    Senior Member Annovdbos's Avatar
    Quote Originally Posted by Kolyo View Post
    Hey Anno,

    Great discussion here and it will be very helpful to all traders new in fundamental data! Your tables are totally correct. I think you already understood the basic principle which pair move higher/ which lower in case of positive/negative data for particular currency. Actually we are always trading the first currency against the second. That's why if the news is positive for the second currency than the pair will go down.
    Hey Kolyo! Thanks for the relpy. I knew you would be interested in this, haha.

    Well yeah, I know it doesn't always exactly work this way. There are sometimes other factors, but it's good to have something to hold on to you know? Otherwise I'd be lost in it all. I like to know there's a basic principle for everything, like if this news gets released than most likely that will be the effect. But yeah it could turn out different.

    I think it can be compared with S/R lines and trendlines. You analyze the charts and put an S/R line or trendline in the charts and you expect price to hold at that point. That's the basic principle here, but it could of course break, you never know for sure. I think here it's the same: If something is expected to be good for USD, EURUSD will most likely go down, but if like you and Okane say, for example the news had already been traded then it might go the other way or not be of any effect at all. Point is that I like to hold on to some basic principles and somewhat 'move around' it from there.

    Well yeah, I'm (still) not very comfortable trading the news. I just don't know enough about it, so I try to avoid the news. But I want to know what stuff means on the calender, cause I can relate to it more. When I saw for example "FOMC member speaking" in the past on the calender, I had absolutely no idea what that meant. I thought: what on earth is a FOMC?! haha. But now that I know, I know what is being discussed by a FOMC member and I know when to stay away and when not to stay away. Also, knowing what news means makes it more interesting to just watch the charts. Cause if you know what a particular news event means, you can make a prediction of your own and see if it comes true. It's more fun and more educational than not knowing what the announcement means and just stay away.

    Ah, I did not know it was possible to get the JPYUSD and USDEUR etc. pairs on tradingview. Thanks for letting me know! That could come in handy every now and then.
    "You think I ain't worth a dollar, but I feel like a millionaire!" - Queens of the stone Age

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