Every time there is a huge event in a region of a base currency such as the USA for USD, the United Kingdom for GPB or the EU for EURO, it affects the markets in various ways.
When different types of stories appear in global news about the United Kingdom, or its current Prime Minister Theresa May, it has an effect on the markets. Just the same way as every time President Trump of the United States of America tweets something, the markets react.
In the United Kingdom, any news about Brexit affects the GPB pairs, in both directions. For example on the latest vote about the Brexit deal, the GBP/JPY pair jumped 100 pips downwards and then upwards. This caused a stop-loss to be hit for many traders and in some cases resulting in accounts with no funds left.
Trading on News:
That is the reason why many professional traders do not trade around the time news are presented, like the BOE rate decisions.
Trading during news comes with a very high risk, which is why we do not recommend it.
However there are a few traders who are doing well during news trading, and one could make a lot of profit during this time, however it is with a significant risk as the currency pairs move quite heavily.
Due to slippage during the news, your Stop Loss can be executed with several pips in difference, which could mean either profit or severe loss.
It’s recommended to not trade around the news, with these specifications:
High Impact News: 60 minutes before and after the news.
Medium Impact News: 30 minutes before and after the news.
Low Impact News: 5 minutes before and after the news.
Important news in the UK affecting trading:
GDP or Gross Domestic Product
BOE or Bank of England rate decisions. Any fluctuation in interest rates affects purchases and trading, which directly affects the GBP standing against other currencies.
In case unemployment rises, it affects GBPs standing in lowering the currency, and if unemployment goes down, it means more people have a job, and the GBP rises in value.
Trading during the news is not recommended because it is easy to lose all invested capital, however if one is successful the rewards are great.
Remember that Brexit news will continue to come in later, even after the UK has left EU. Make sure to follow proper risk management when you trade during Brexit related news, as it will affect your trading results.
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