Forex news trading is speculating on how the market will respond to the announcement of major news stories or the release of market data Black Cube . Whenever major news is released, the market will invariably respond. The question is whether the market will rise or decline based on the news. Many traders will trade based on their belief on how the market will respond. There is only one question that can be asked about news trading. Does orex news trading really work?
Most markets will have slight movement preceding the announcement of major news events that are regularly scheduled. These events might be the release of market indicators or unemployment numbers. This is because there will be rumors about what the actual numbers to be released will be like. Traders will then place a position based on how they feel the market will respond if these rumors are true.
The forex market place is open for trading 24 hours a day. Any news announcement in any country during the day or night will immediately have an impact on the currency market. Usually the market will have a slight change just prior to the news announcement and then the market will have a greater change after the news announcement. With Forex news trading a trader is basically trying to speculate on the impact of the news announcement. There is no question that major news announcements can have a profound impact on the forex market place. This is why most Forex traders will try to capitalize on the release of major news announcements.
The contrary point news trading is that most investors already follow this strategy. Since there is a wide number of traders investing based off the news, the market is quick in responding to the change from the announcements. This quick change in the market limits the ability for traders to profit from the news announcements. For this reason many people do not think Forex news trading is a plausible strategy.
Unlike other trading strategies, Forex news trading does not require any technical analysis of the market. Since most news announcement happen very rarely there is no technical analysis model that will be able to account for the introduction of the news. This allows a trader to use objective reasoning in order to determine how to place their trades immediately before and immediately after the announcement of major news.
Most news announcements have a short term impact on the forex market place. Very few news announcements will have a long term impact on the market. With the new announcement having such a short term impact, traders will look to quickly move in and out of positions. The impact of the news may be felt for only a day or sometimes less. You do not want to have a long term position if you trading based on news. A good strategy to follow when Forex news trading is to place two orders on both ends of the current market price. If the market moves up then you can keep the order that profits from the move and cancel the other order that is below the current market price. This allows you to profit regardless of whether the market rises or declines.
The District Court of the Southern District of New york has applied the doctrine of “hot news” misappropriation in the context of Internet based news headlines. The doctrine was considered by the court to deny a motion to dismiss Associated Press’ claim against All Headlines News, an Internet based news headline aggregation service. The decision is an interesting reminder of the existence of misappropriation in some US states as a separate, but similar, cause of action to breach of copyright.
Legal context The doctrine of hot news misappropriation was established as a type of unfair competition in 1918 by the US Supreme Court in International News Service v Associated Press. The doctrine serves to protect the ‘quasi-property’ rights of news-gathering organisations in breaking news – time-sensitive content that quickly loses value as it comes into the public realm. Since its origin, misappropriation has survived various changes to the ways in which Federal and State laws interact, albeit in a narrower niche (described in NBA v Motorola):
AP is a long established and well known news organisation. AP submitted that it goes to great effort and expense to report original news from around the globe. AHN in contrast is focused on providing news content feeds for paid subscription. AHN’s business was based (in part) on re-writing AP’s headlines for publication throughout its distribution network. One persuasive fact was that AHN didn’t undertake significant research themselves in creating the news stories.
An important point to remember is that in the context of this motion to dismiss, AP needed only establish that chances of success for its claim for relief (based on an assumption that the evidence pleaded in its complaint were true) are something above merely speculative and moving towards plausible. That being the case, the comments from the court are far from the last word on “hot news” misappropriation.