This friday during the european session some smaller news reports from the UK came in at 9:30 am London time or 4:30am EST and gave a nice move in forex to trade. Trading the news can be very profitable on the these minor reports as a trader has plenty of time to get in after the news data hits the wires and the forex pair's price starts to move. OK so it is not the block-buster huge pip forex moves like traders can see when trading the news on the big reports but at the end of the day it is all about leverage anyhow, and alot of those big report blast off before you can get a chance to get in and there is always the chance of the broker slipping your trade entry order.Higher mortgage approvals show that the property market is heating up and this is good news for the economy. Based on the moves observed on the British Pound on past reports, a deviation from the expected number was found which was highly likely to cause a move. Plenty out there will go on about how trading the news is a gamble, but they are just plan wrong, and the posts here will prove it. M4 Money Supply is basically about the how many Pounds are slushing around in the economy, and the basic supply-demand relationship exits...thus lower supply means higher price, we don't have the demand variable in this, but we don't need it.
So basically lower money supply and higher mortgage approvals means the British Pound Sterling currency should appreciate, sending GBPUSD, GBPCHF & GBPJPY higher or EURGBP lower. In the end both money supply and mortgage approvals came out higher, this means the data was conflicting....with M4 bearish and mortage approvals bullish for the pound, however the M4 deviation was quite small at +0.1 above the expected, but luckily the mortgage approvals number was significantly higher than expected. Here are the numbers:
*(UK)SEPT MORTGAGE APPROVALS:47.5K V 46.0KE -> +1.5 positive deviation above expected
*(UK) SEPT FINAL M4 MONEY SUPPLY M/M: -0.2% V -0.3% PRELIM; Y/Y: 1.0% V 0.9% PRELIM
or +0.1 deviation from the expected number for both monthly and yearly
We traded the forex news live in the room, giving a trading signal in realtime to our members. The GBPUSD long trade in the image above I took on my own, as it was a bit more risky as the market had a Risk Aversion tone thru-out the asian session into the European and London forex trading session. This Risk Aversion was causing the USD to appreciate and drive the EURUSD, AUDUSD & GBPUSD down and USDCHF up. Therefore to the traders in the live forex news trading signal room I gave the EURGBP short to shield them from the Risk Aversion in the market at the time. Options for trading other pairs including GBPCHF & GBPJPY are always given so more advanced members can take more trades as they deem appropriate to there account size and experience. Sometimes options for trading other markets like indices or futures are also given. With news trading you want to start small and build up your confidence and experience.
An image of the EURGBP short given in the live forex and futures news trading room is to the right.
