There is no doubt that trading with live forex news can be an important tool in forex markets.
But before you know exactly what you are getting into, one should be well familiar with the live forex news trading risks involved. Read on to more on the topic in this article.
There are many risks in trading with live forex news and it is that we should get familiar with them before we start.
Slippage
According to forextrading.org.za, live forex news play a major role in increasing the market volatility, which means that the price can move as little as 5 pips to 20 pips within seconds. You will get much different price than you anticipated and this can be especially risky with limit entry orders. Understand these risks in live forex news trading to avoid costly mistakes.
Order Freeze
Just before a major news release, many brokers who prevent limit and market orders. You will come across brokers who guarantee fixed spreads, which is because the spread is too wide. The brokers stand to lose money if they offered them with their fixed spreads.
Volatility/ Whipsaws
Another of the live forex news trading risks which you may encounter is that major live forex news reports and economic releases can swing the market 20 to 50 pips in no time. This can be very dangerous even for the most seasoned traders. The markets can turn against you and you won’t get time to stop the losing trades, this is according to online trading sa.
Spreads
You will come across some brokers guaranteeing execution but they do not guarantee spreads. The spreads widen dramatically during live forex news. Hence, if you like taking small profits like 5 to 10 pips, there are more chances of your profits getting axed and you will end up losing trades. These are some of the live forex news trading risks that you should be well aware of.
Remember that like any other investment, there are potential risks in trading with live forex news. The main risks in live forex news trading are that a trade must be made quickly or else you end up making losses.
