Forex trading is one of the most profitable passive income jobs in the world. Forex trading, otherwise known as foreign exchange trading, is also one of the most traded industries in the financial market. It’s simple and easy to trade with, whether as a beginner or advanced trader. However, just because forex trading is simple, doesn’t mean that it guarantees profits right away. One of the known strategies in trading is the fundamental analysis, which relies heavily on news platforms such as Forex Factory. In this article, we’ll be talking about the importance of Forex Factory for traders.
What is Forex Factory?
Forex Factory is a platform where you can see all the news and current events happening with the currencies you’re trading. Whether as a beginner or advanced trader, it’s an important habit to be updated with what’s happening as this can immensely affect your trades, both for the better or worse. In observing the news, it ranges from neutral, light, medium, and heavy impacts wherein red is the heaviest impact, whereas orange is medium impact. Normally before entering a trade, you wouldn’t want to trade a currency that has a medium to heavy impact for the day as your trade can go against you, causing you to lose all your running trades. In Forex Factory, it’s a very detail-oriented news and current events platform where you can evidently see the time in which the news will hit. You won’t just see the specific news for the day, but also for the given week. Launched in 2004, Forex Factory has been the primary source for traders in terms of fundamental analysis.
What is the importance of Forex Factory?
#1 Fundamental Analysis
You may be okay with just using technical analysis for trading but for a more successful forex trading experience, both technical and fundamental analysis should be used for all your trades. Fundamental analysis involves more in-depth research and observation on a certain currency, including their news and current events. When done right, fundamental analysis paired with technical analysis can lead you to have a successful trade. Through Forex Factory, you can have a successful fundamental, while avoiding critical timeframes to trade in, especially with a major currency where the market is extremely volatile.
#2 Reduced risk of loss
If you’re impulsive and irrational in your trades, you’ll likely persist in trading a currency, even when you know it has a high impact for the day. For instance, you see that there is high impact news about to happen at 3 pm for the EUR currency and yet, you still enter a EURUSD trade before the news hits. This may gain you profit, but the loss is even greater than the reward in this case. When a news impact hits a currency, the market is extremely volatile and when going against you, this may lead to a hurtful loss. While nobody can ever predict the market perfectly, Forex Factory can help you determine which currencies to avoid trading before a certain new event hits.
#3 Detailed and precise news
On the Forex Factory website, there are five buttons you can click on, one of them being news. Compared to the home page, this is a more detailed version of the news. You can see in this aspect what made a certain category high or medium impact. For instance, if a certain currency has a high impact because of unemployment rates, you can see in the news aspect the events that led to this headline and what made it a high impact. It may seem like a simple aspect, but this is the root of a successful forex trading experience. Detail-oriented news is how you determine that despite the news that will happen, your trade will go in the direction you predict.
In conclusion, I hope this article was able to help you gain insight into the significance of using Forex Factory as a forex trader. Together with your technical analysis, this will help you enter more accurate traders that will turn to profits rather than losses. Forex Factory is the most common go-to platform forex traders ensure to check before entering or closing their trades as it has everything you need to keep updated with news and current affairs.