Trading XAUUSD Using News Strategy

One of the trading strategies that can be used to trade XAUUSD that is borrowed from currency trading is the FX News Trading strategy and for XAUUSD trading we can call it Gold News Trading Strategy.

Economic News reports often evoke strong moves in the currency trading market & also Gold trading market because XAUUSD is traded against the currency USD. These moves create a lot of opportunities for trading for the break-out traders who look to trade the short-term market moves.However, not all the economic data reports are tradeable, some economic reports have more impact than others & only those that have a significant effect on the price movement of XAUUSD against the USD can be traded using this news strategy.

The Economic News Reports from USA will be used to trade when using this strategy. The news reports coming From USA can be found on the schedule Economic Calendar, This Economic Calendar is provided online by online brokers & also the other online trading services providers, traders can search for this News Calendar online.

By looking at the Economic Calendar schedule of economic news data reports traders can find out the significance of the scheduled news announcements to identify whether the news announcements are worth trading or not based on the expected volatility of these news reports. These Economic Data News Data Reports are marked and denoted in terms of their significance, there are three levels of significance and these are: RED, ORANGE and GREEN. Most Significant News Data Report is Marked RED in color, the least significant ones are marked in GREEN while those reports marked in ORANGE are in between.

The only economic news reports that traders should focus on in trading are those that are marked in RED & those marked in ORANGE. Traders should not trade the GREEN ones.

General Approach to News Trading Strategy

There are two general approaches which can be used when it comes to gold news trading.

These two methods are:

Trading the Break Out Channel
Analyzing the Economic News Reports

Trading the Breakout Channel

Gold traders will set a buy stop pending sell stop above and below the Gold price respectively. These orders will be on both sides of the price so that when the Economic News Report is released one of the orders will probably be hit and if price continues moving in that particular direction due to this news report then the trader will make short term profits from this move.

However, due to the volatility caused by news reports both these orders may be hit both within a short time period which means that a gold trader can make a loss in one of the open positions or in some cases both of these trading orders.

Analyzing the Fundamental Economic News Data Reports

XAUUSD traders can forecast the most likely direction of Gold by looking at the Economic Calendar Fields labeled and marked as Forecast and Previous. These 2 figures are then compared and analyzed with the Actual News Data Report that is released to give an idea of the next likely direction of the price move.

Because XAU is traded against the USD - XAUUSD, the only Economic News Reports which a gold trader will be watching out for are the news reports from the USA.

These Gold traders will watch the news announcements & pay close attention to the Actual news data that is reported - closely monitor the economic numbers.

If the numbers released come as a surprise to the upside of the USD the online traders of Gold will short XAUUSD (Gold) - when traders sell XAU they'll simultaneously be buying the USD the same time.

If the numbers released come as a surprise to the downside of the USD the Gold traders of XAUUSD will buy Gold (XAUUSD) - when traders buy XAU they will simultaneously be selling USD at the same time.

Traders also will know and analyze when to trade & when not to trade based on if the Actual news data reports are close to what the forecast predicted was or not.

For the news traders the most important thing to know is that the analysis of the previous news data report, the forecast & the actual news data report shall be used to identify whether if to open a position or not and what direction to open the trade in.

Because many gold traders will be positioning themselves to trade Gold when these news announcements are just about to be announced or shortly after the news reports have been announced, it means that these news announcements will cause a lot of market volatility which will give traders a good opportunity for trading. News traders can then learn how to best position themselves and their trade positions when trading during these economic news reports by learning more about these 2 news trading methods and doing some practice on their Gold demo trading demo account.

A XAUUSD news trader will keep a schedule of all the USA economic news announcements using the Economic Calendar. This calendar contains a timetable of the schedule of when the news reports will be released & also the previous news reports & the forecasts of these news reports. These economic calendars will keep this schedule and display it well in advance & this way a xauusd trader will be able to know when there are upcoming scheduled economic news announcements.

A trader will keep this schedule before the news are released and also use the same Economic Calendar to get the news data after these reports are released, the economic calendar also will be updated in realtime.

The Economic Calendar is compiled by Financial Analysts and Economist who study the fundamental reports & economies of the world. By having this News Calendar traders can schedule when to trade the economic data well in advance. To find a copy of the Economic Calendar traders can search online for "Forex Calendar" or "News Calendar" & traders will find a couple of these trading economic calendars hosted online on various online XAUUSD & Forex broker websites or other FX trading sites.

About Economic Calendars

An News Calendar will usually have 3 readings:

Previous ReadingForecastActual News

Previous Reading - This piece of the info shows the previous value or reading of a previous economic news data reports. Most reports are in the format of numeric numbers or percents.

Forecast - Forecast shows the value for the news report that economic experts predict for that particular news data report. This figure is fore-casted way before the day of the economic data release. Economic and Financial Analysts will put across their forecast figures.

If the forecast number is better than previous for USD, traders sell Gold
If the fore-cast number is worse than the previous for USD, traders will buy XAUUSD

Actual News Data Report

This is what will determine if there will be a big price movement or none at all.

If the actual data release is same to the forecast, then there will not be much movement in the prices of XAUUSD, this is because Gold traders anticipated this information and have already transacted the news data reports even before the actual information report was released.

If the actual news release isn't the same as the forecast, this will come in as a surprise to the Gold traders, if the forecast and actual information release isn't the same then, the online traders will have to adjust their trade positions accordingly and this will cause a price reversal in the in the opposite trend market trend trend market trend trend market trend market trend market direction.

If likewise the actual data value was way better than expected, then the Gold price will continue moving further towards its direction and gain further momentum towards that direction. Likewise if the actual news report is worse than the predicted data, the price movement will also continue in the same direction as that of before the news release & this time gain more momentum and move further towards that direction.

Example:When the new info is announced/released then it has impact on the market only if it is different than expected. If the information is as expected then it has no impact on a currency because the information is already available to the public & has already been taken in to account.

In order to use the fundamental analysis when analyzing news reports, you should first be get to know the economic market indicators. Economic calendar containing all the fundamental indicators is developed by economists. Economists also use this Economic Calendar to predict different news reports. These predictions are provided by market analysts. This can have great impact on the market price. Gold Traders will watch out for news data reports which have a great impact on the financial trading markets and use these news data reports to adjust their trade positions.

When are USA economic news data reports released?

8:30 am - 10:00 am EST

US Fundamental Economic News Data Reports are released between 8:30 am and 10:00 am EST, Gold traders can schedule to follow and trade these news reports during this time of the economic news release.

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