Market trends and asset prices are affected by a great variety of factors, news being amongst the main ones. These could be political, socio-economic, financial and company specific updates that drastically chance the trading horizon in many ways. News that positively impact a company or a market tend to raise asset prices, while negative news have the opposite effect.
Navigating, selecting the type of news to focus on and applying them to your trading maybe quite challenging and hopefully this article will help you to clarify certain aspects of this process.
(NOTE: Before we continue, we have to give a disclaimer that the trading products offered by the companies listed on this website carry a high level of risk and can result in the loss of all your funds. CFDs are complicated instruments that are never guaranteed to provide you supplemental earnings. In fact, Around 68% of all retail investors experienced a loss while trading CFDs. Make sure to keep this in mind before attempting to use the eToro platform yourself. All the information found on this website is not official trading advice and all practices shown are referenced for the use of the Demo account only.)
News to consider while trading
Economic news are some of the most important to pay attention to. This does not only include releases on the news, online and magazines, but also most recent publications and updated statistics on key economic indicators, such as interest rates, especially for the countries whose markets you are trading in, inflation, unemployment data, sectoral retail sales information and so on.
This may be particularly important if your investment is thematic and focuses on a certain type of companies, region or market. For instance, if a trader focuses on an Exchange Traded Fund (ETF) that comprises assets such as stock from companies only in the USA or Europe, they might want to pay specific attention to updates around that geographical area.
For example, increased interest rates in one country tend to appreciate (i.e. strengthen) against other currencies, and may be bought (i.e. taking the long position) while other counter currencies sold, for example currencies of relatively weaker economies, by traders hoping to make a profit out of that change. Trading currency pairs are examples of some underlying trading basics to be mastered.
Many times financial news include company specific updates and financial report releases of publicly traded companies which certainly influence firm’s value and stock prices. Certainly news that are perceived as positive by the market drive asset value up and vice versa, as unfavorable sales, cash flow or revenue data leads to lower earnings per share and hence lower share price. Do not undermine the importance of reports and released statistics in your trading.
Political updates may greatly influence the market sentiment, especially when related to countries your trades mostly focus on. These could include all types of events, such as election results or governmental alterations, protesting waves and even revolutions, change of leaders or other destabilizing news.
The effects of political announcements may vary from the change in currency value and consequently exchange rates, price of government bonds and other assets, and the overall value of investment assets as perceived by the market.
Force majeure or unforeseen events cannot happen without any preceding market expectation, as in the case of for example election results or financial report releases, and may quickly turn the situation on the market. These include things like war outbreaks, weather crisis, riots and so on. Reaction of the market to such events could take from several minutes to a few hours or even days.
Furthermore, since these news come beyond expectation their effect on markets tend to be more impactful that of expected ones.
News on eToro
eToro platform provides an interactive News Feed with posts from various users related to their performance, trading discoveries, their expectations regarding release of news, doubts and points to be discussed. This option is accessible to all users regardless of the degree of recognition, and likewise anyone could comment on other traders’ posts.
Being always on top of updates or constantly monitoring the market may be quite a time consuming and tiring process. The platform provides a special tool for monitoring events that may affect any currency available for trading. Economic calendar may be customized to your preference by selecting the time zone or dates of interest to assist in deciding on a strategy accordingly.
In fact, something as simple as your personalized watchlist on the trading overview will keep you constantly updated on the markets or specific assets you are interested in trading.
You can customize your selection by choosing the asset and adding it to your watch list.
You can furthermore customize it by, for example, adjusting the time frame, as shown on the image below. A watchlist can comprise a maximum of 50 assets to be monitored, however you can create as many as 10 different watch list to group the assets by the type, geographical location or other style of your choice.
Do not forget to master your skills on the practice Demo account, good luck and enjoy trading!
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Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
Past performance is not an indication of future results. Trading history presented is less than 5 complete years and may not suffice as basis for investment decision.
Copy trading is a portfolio management service, provided by eToro (Europe) Ltd., which is authorized and regulated by the Cyprus Securities and Exchange Commission.
Cryptoasset investing is unregulated in some EU countries and the UK. No consumer protection. Your capital is at risk.
eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity-specific information about eToro.
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