The use of the price action vs news trading strategy is still a debate among traders, both beginner and professional traders. Determining the best forex trading strategy is not an easy matter.
Some say Price Action is a better strategy than News Trading, but this is difficult to answer the truth. Because, price action vs news trading have different streams.
Price Action analyses the market in terms of technical analysis. Meanwhile, News Trading relies on economic data and market news releases to determine entry and exit positions.
Price Action VS News Trading, Start with Understanding Price Action Strategy
Price Action trading is a technical strategy that relies on price movements over time. Usually, price action analysis is done by paying attention to the formation of candlestick bars.
In practice, a confirmation is needed that can support the signal from Price Action. Confirmation in question, for example, such as Support and Resistance and technical indicators.
Usually, the indicator that is often used to confirm the direction of the trend is the Moving Average. In addition, three things need to be considered in the price action strategy, such as:
1. Pin Bar: That is a candlestick that has a tail longer than the body, usually protruding outward.
2. Inside Bar: Two candlesticks where the first candle is the parent, while the second is the derivative. Inside Bar is often used as a reversal signal.
3. Fakey Bar: A formation indicating resistance at a significant level. Fakey Bar consists of an Inside Bar followed by a False Break and usually closes at the Inside Bar range level.
News Trading Strategy
News Trading is a strategy by looking at the news that you can learn from the best forex broker. This strategy compares the difference between the actual results of economic news with the predicted value of the news.
If the difference is large enough, then the price movement is believed to be more drastic than if the difference is small or as predicted. The steps to apply News Trading can be seen below.
1. Monitoring
Generally, traders use data releases whose publication times are predetermined, so it is important to keep track of the correct times. Usually, Traders rely on the economic calendar to monitor what impact data will be released.
2. Selection
Many news publications can be used as references, but you can only focus on news that has a High Impact. Do not forget to adjust the news with the currency pair you choose.
3. Execution Process
After the news comes out, try to refresh the economic calendar to bring up the actual values. After that compare the actual value with the expectation. If the news has no actual value, then don't trade just yet.
The Best Strategy You Can Use
Then which is the best strategy between price action vs news trading? Price Action or News Trading? Before choosing between Price Action or News Trading, it's worth looking at the drawbacks of each strategy.
Price Action using price charts sounds easier to apply. Indeed, with this method, it becomes more focused because there is only one source of information, namely price changes themselves.
However, the lack of clues in determining when to respond to signals, makes Price Action seem 'trap' for novice traders. On the other hand, News Trading sounds simple because you only need to read news and publication releases.
However, this makes it difficult for News Trading to be applied to a naked chart, because news alone cannot provide signals of when to enter and exit the market. To be able to trade well, you can learn the ins and outs of trading with a trusted broker like Didimax forex broker.
If you master the basics of forex well, then you will be able to find the right strategy for your trading style. Price action vs news trading strategy will not confuse you.
