Is it Worth it to Trade the News?

November 01, 2022 07:14

In this article, you will read about the pros and cons of trading on financial news. The topics include:

  • the time and experience needed to stay updated with financial news;
  • creating risk-reward scenarios around news releases;
  • being aware of emotional reactions to unexpected events.

Is it worth it to trade the financial news?

Opinions tend to fall into two major camps. One camp asserts news is useless when making trading decisions. The other believes that news is essential to making trading decisions. Somewhere in the middle of them is the opinion that trading decisions might be affected by the news, especially big news, and the influence news can have on market sentiment should be monitored.

Wherever you fall in the range of opinion, there are two key things to consider when trading news: time and experience.

Time and experience

The importance of gaining news trading experience can’t be overstated. The problem is that getting experience in the financial markets could end up being a costly lesson, but there is a solution to this. Before opening a Live Account, it’s wise to start learning on a Demo Account, which features realistic market conditions without risking your own capital.

Researching the daily news events that interest you takes time but there are ways to get the information efficiently. The Admirals Forex Calendar offers one solution, as it contains the market-moving economic news of the day and analysts’ expectations of the results.

Our weekly trading podcasts offer summaries of the major market events in less than five minutes.

Admirals' webinars take a deep dive into various economic and market trends for yet another way to understand how experienced traders approach their strategies.

Whether the time and experience described above is a plus or a minus is up to you to decide as it depends on the time you have available and to what extent you are interested in trading on the news.

Risk-reward scenarios

Another side to the question of whether it’s worth trading on the news is the effort to create risk-reward scenarios. Thinking through the possible outcomes of a trading news event is an important step to take before deciding. Risk management steps should naturally be included in this evaluation, as any scenario you might come up with could fail to materialize.

Risk-reward scenarios can include the possibility of the result being over-or-under expectations and in-line with expectations. The various trading tools in our trading platform MetaTrader 5 can support your decision-making process here as there are plenty of charts capturing market trends with various patterns. Learning how to use trading tools is also an important step which you can take by attending our webinars.

Being aware of emotional reactions

Unexpected news results and geopolitical events come with the territory and can cause mass emotional reactions and market-moving trends. If you’re aware of the possibility of the unexpected, you can build it into your trading scenarios. Some examples of unexpected news events that nobody wants but are an unfortunate part of life are:

  • pandemics,
  • conflicts,
  • sudden economic downturns.

By staying well-read and updated with the major news events, whether economic or otherwise, you increase the likelihood of being prepared for the unexpected.

Remember the middle opinion, neither for nor against but open to the possibility? The news might affect the trading markets, so it’s worth staying updated with free financial news available when you open an account with us.

Wrapping up, it takes time and experience to trade on financial news, but it is an integral part of the market landscape and often part of the decision-making process when trading commodities and currencies.

Admirals offers a wide range of educational and analytical webinars. To meet and interact with expert traders, join our free webinars!

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This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

Sarah Fenwick
Sarah Fenwick Financial Writer, Admirals London

Sarah Fenwick's background is in journalism and mass communications. She has worked as a correspondent covering Swiss Stock Exchange news and written about finance and economics for 15 years.