Quick question about news

So I'm still currently in the process of learning ... but I have a quick question.

Assuming I'm trading the pair GBP/USD, and tomorrow (when news is announced about British government public finances) the news is bad is bad, would that therefore mean I should short GBP/USD or would it mean I'd go long on it?

 

forexfactory has good information about specific news items like this.

In this case, an announcement indicating a budget surplus is good for the currency, and a deficit is bad. Good for GBP means GBP/USD goes up.

BTW trading news events is very hard since the increased volatility widens the bid/ask spread.

 

Awesome. Thanks Stevegee58. I'll check out that resource now. Also thanks for letting me know. Quite a journey so far learning, but it's been fun (practising with a demo).

 

Awesome. Thanks Stevegee58. I'll check out that resource now. Also thanks for letting me know. Quite a journey so far learning, but it's been fun (practising with a demo).

Also (sorry) I got one more question. Today, in about an hour, there will be a USD news report on Exisiting Home Sales (forecast at 5.50m) - assuming the number is higher (or even lower), how would that effect the GBP/USD pair?

 

Watch a couple of news releases relevant to what you are trading before you attempt to trade them. I do not trade when news is released.

 

Understood. Thanks Wartrace! Does that mean you trade on a technical basis?

 

In a perfect scenario good UK news would cause GBP to appreciate and vice versa on bad news. However, if it was easy enough to long on good news and short on bad we'd all be rich. This is seldom the case except on major news the big financial market participants are focused on. In my opinion you still have much to learn. I would say focus on watching how markets react to news on a daily basis and read up on market microstructure to learn the why.

 

Thanks for clarifying. Yup, I have much to learn! Thanks for pointing me in the right direction !

 

US home sales: if home sales are strong it's good for the USD. So if home sales are better than forecast then the USD will be stronger than the GBP, so GBP/USD goes down.

 

one should not trade on the news, one should trade on the reaction to the news

so in fact you somehow should anticipate interpretation of the news by the public, and determine not just the direction of the trend but its strength as well

how you will do that ?

i do not know

he-he