Everyone is biased with the technical data in the trading industry. The rookie’s often think technical analysis is the “Ultimate Holy Grail” for the investment business. They often buy the most expensive trading bots with the hope that technical data can help them to become a profitable trader. A good bot can definitely give you the upper hand in trading business but you can’t ignore the importance of economic news.
News is the most essential price driving catalyst in the Forex market. In fact, in sort of investment business news plays the most important rules since they create volatility. This news can be divided into three major groups.
These are –
- Low impact news
- Medium impact news
- High impact news
These are the three most important news you must focus on to become a profitable trader. Instead of using the old fashioned way, smart investors are now using trading bots to extract the news. But loading up the bots to the platform is not enough. You have to carefully assess a few important metrics of the bots. Let’s explore the details
Classification of the news
As we have said earlier, the news is divided into three major groups. The trading bots must have the ability to analyze the severity of the news. A good trading bot can even predict the volatility of the asset in terms of pips. The source code for predicting such sophisticated data is very simple. In most cases, low impact news creates 5 -10 pips. On the contrary, the medium impact news can create a 20-30 pips movement. Things become wild for high impact news. At times the market might even create more than 100 pips.
Predicting these numbers with historic price movement is easy but it’s not super accurate. The bots can find the average price move for particular news and can help you to determine the profit factors and stop loss in the trades. Before you start using such bots, use this feature in the demo account and see how it really works.
News bots are very sophisticated trading. Latency is a crucial factor while using such bots. Let’s say, you have created a perfect news bot that can analyze the most critical information. But if the processing is done with a slow algorithm, you are not going to get any benefit. You have to optimize the latency in order to ensure the success of your news bot.
Remember, information needs to be extracted in the fastest manner possible. And if you get the news data super-fast, you will get the unique chance to think over the economic data.
Rumors and false price movement
Do you know some of the news bots can identify the rumors and false price movement by comparing the actual, forecasted and historic data? It might sound ridiculous but the advanced algorithm can solve such problems. In fact, if you know the proper way to find the false price movement based on news data, you can embed the idea into the trading bots. Just hire a professional developer and he will do all the hard work. But be very careful when you use a custom made EAs. Since there will be no review in the online marketplace, you have to backtest the news EAs and see whether it can really extract the information from the major rumors and false price movement.
Some of you might be thinking about creating such a news bot is impossible. To show how easy it is, we are going to give you a simple example. We all know the market exhibits dramatic spikes in a press conference and global economic announcement. You can design the bot to give less priority to such news or you can create a code that will alarm you about such market data.
Staying tuned with newsbot
To stay tuned with the news bot, you have to trade in a disciplined way. Unless you have a trading routine, the news bot will be of no use. Try to learn trading during the most active trading hours since most of the news bot gives critical information on that particular period of time. Follow the trading routine and look at the data of the news bot. It won’t take much time to analyze the state of the market.
By now you know how to extract the critical information from the news bot and its importance. But don’t forget the fact, the design process of the newsbot is very crucial. Unless you are able to optimize the news bot to reduce the latency, you are not going to be benefited from this amazing tool. And try to display the extracted news in a short format. Trading news is a very challenging task and requires quick decision-making ability. So, design your news trading bot accordingly.