Okay, so we're going to move on now to addressing the question of why trade the news. This is an opportunity for me to really back up those bolts statements that I've already mentioned to you about why trading news is so powerful. So we're going to start off by really adding a bit more logic in terms of why we want to trade the news. So let's go through that. So first and foremost, I've had the fortune to spend a lot of time with bank traders and hedge fund managers. I've had the opportunity to go and sit next to them on the floor and at their trading desks.

And I can assure you that all of the major players, the large trading institutions use economic news to trade. In fact, when I mentioned to them about my early days when I was a purely technical trader ignoring the news, they laughed at me because they were like, you're missing out on the most important element of trading the markets, essentially the news drives the markets. So when the institutions the bank, traders in the hedge fund trades, the guys that move the market when they tell you that, you need to heed that and you need to take it on board. So when they started to, to explain the powerful nature of understanding and interpreting the news and then using it to your advantage, I never really looked back, it became an integral part of my trading approach. So we want to align ourselves with those big institutional traders, we want to trade with them, because if we start trading in the opposite direction to them, we'll get absolutely eaten alive.

So it's really, really important that we tune into their approach. And we, over the course of the next few topics will learn to do exactly that. So we know that we're aligning ourselves with them, never against them. Now bearing in mind that the question you may have, which is a question I had is, well, don't they get the advantage? Don't they spend millions of pounds to get the best offices, the best technology and have the best analyst team to help them? Well?

Yes, they do. But I'm going to show Are you a way that you can almost identically replicate the approach of an institute institutional trader without having to spend the thousands and thousands of pounds that they will spend on their own technology. So I'm going to talk you through that in future topics. But we can absolutely align ourselves. So we are aligning ourselves as a professional trader, rather than a retail trader trying to take on the big boys. We want to replicate what the big boys are doing and let their let their positions, their ability to move the market simply move our positions alongside them.

And one of the one things I want to do is not just tell you because I could talk all day about how, how wonderful trading the news is and how powerful it is, but I'd rather show you because that adds a bit more logic to my statements and it backs them up very, very powerfully. So let me show you a few examples of how economic news massively moved the currency markets. So example one trading the kiwi dollar after the New Zealand right decision now, I've recorded this course in July 2015. So a lot of these examples are very, very recent. However, if you're watching the course, later down the line, these will be a little bit dated. But essentially, these news announcements, they'll have been exactly would have got the same reaction 10 years ago, and we'll get the same reactions in 10 years time.

News doesn't change either strengthens the currency, or weakens it. And what I'll do with the course is I'll constantly upload fresh videos, analyzing new up to date example. So you're always in tune with what's recently been going on. But these are examples that have happened over the past few months. So they're very fresh, they're very up to date. So this was actually in June.

So last month. What we got as highlighted here is at 10 o'clock GMT or London time on the 10th of June 2015. We have the New Zealand rate confirmation It was expected to come in at 3.5. So this little column here is the expected figure 3.5. Whilst this little column here was the actual figure, so the interest rate for New Zealand was cut, it was lowered. And just to give you a high level view is when they cut rates, it's negative for the local currency, which in this example was bad for the kiwi.

So this data came out worse than expected. We're going to go into a lot more detail in terms of the calendar and the news events in due course, it's just to show you the power of economic events and the movements that you can get off the back of them. So this was from New Zealand, it was a worse and expected figure up from the cash rate or the interest rate. So let's see what happened at that particular time. So here is the hourly chart of Kiwi dollar. And this little box here highlights the candle, which was the 10 o'clock candle.

Now note that the charts I'm using are FX, FX pro charts and they're to two hours ahead of London. So this was the 10 o'clock GMT or London time candle when that news release was announced. And as you can see, the market fell Kiwi Dollar fell 130 pips from that news announcement in less than a day, an absolutely huge move that took place. After an economic news release, it weakened the kiwi because it was a bad data point for New Zealand. So we can significantly against the US dollar. So a great example there of how a data point can cause a very quick and significant movement in the markets.

Now you're probably thinking, Well, how do we prevent that? Well, that's what we're going to cover in future in future topics. For now. It's just showing you how powerful news can be what an impact it can have on a country. See and a currency pair. And obviously, we can now see the profit potential and the speed that we can obtain those profits from this particular example.

Let's have a look at another example example to trading dollar CAD after a Canadian DDP which is the gross domestic product, which is another major economic news release. Let's have a look at what happened. So firstly, we can see that it came out at 130 GMT or London time on Tuesday, June the 30th. As highlighted by this box here, we had the Canadian GDP figure, which as I mentioned before, it's just their their their country's GDP, the gross domestic product, how much they've they've earned. It was expected to come in at naught point one which is this middle column here. So the market was expecting a slightly positive figure, but it actually came in as highlighted by this little column here, minus naught point one.

So it came in worse than expected, so it was a bad figure for the Canadian dollar. We would expect the Canadian dollar to weaken after that bad data points. So let's have a look at a example on the chart. So this is all CAD. So as you can see the market has moved up significantly. Why is it moved up significantly?

Well, because the CAD weakened aggressively after that news announcement, the dollar was able to out perform the Canadian dollar. So this chart and the market going up it rose 130 pips from the news announcement in less than five hours. So again, showing you the powerful nature of news announcements that CAD we can significant significantly, meaning that the dollar could add strengthen the Canadian dollar, meaning that the price or the exchange rate of this currency pair rose aggressively for several hours. This box here highlights when the news came out. So our job is to prepare ourselves for the news announcements, and as soon as they come out, we're looking to take advantage of IE in this example here buying dollar CAD to take advantage of the Canadian dollar weakness. Another example, example three trading the Australian dollar after the Australian trade balance, which is again another economic news event.

Looking at the diary, we can see that on Thursday, the fourth of June 2015. We had the Australian trade balance, which was expected at minus 2.17. And it actually came in at a worse minus figure. So minus 3.8. So this trade balance finger came in much worse than the market was expecting. This caused significant Australian dollar weakness, which we in due course will know exactly how to take advantage of so what would we expect on our charts?

Well, let's have a quick look. Well, here's the Aussie dollar chart on the five minute time frame. And you can see that when the news was released, we had a Massive move down, over 60 pips movement from when the news announcement took place in around about 10 minutes. So the previous two examples took a few hours to generate their profits. On this particular example, all the market did was full, aggressively lower. Again, we'll be looking to prepare ourselves in advance of that news event.

So when it happens, we can get into the market as quickly as possible to maximize our returns as much as possible. And the reason the market dropped is because it was the Aussie dollar currency bear. So the Aussie was weaker than the dollar, meaning that the exchange rate fell. So that's a nice example of an Aussie dollar trade that could have been taken selling off the back of a bad data point for Australia. Now, I could show you many, many more. This is the three examples that took place in the last couple of months.

I could show you many anymore, but I think you get the point. And the point being news announcements can and more often will create some huge, huge movements in the markets that are very one directional in their nature. And normally very, very quick, which is ideal for a trader because we make our profits very, very quick. And we're able to take a trade with confidence because we're, we're we have a good understanding of where we believe the market direction may lie if a data point comes in worse or better than expected. And in terms of the news announcements, there are many, many news announcements. This is just an average week.

So from Monday through to Friday, when we're looking to trade these news announcements, so you may be thinking well do you get news every now and again? No, you get it? every single week. Sometimes weeks are busier than others but you will get news announcements, high impact news announcements every single week in all three time zones. So you'll get them in the European session in the American session and in the Australasian session, so there are plenty of opportunities for you to take advantage of, do you need to be taking advantage of every single one? Well, you can, but you don't have to, you can just concentrate on the news announcements that are coming out in the timezone that you are currently in.

Okay, so just to summarize this particular section, hopefully, that's got you, got you very excited whet the appetite for you to learn more, because I don't want to think that trading the news is easy, because there's still a few steps that we need to take. But when you get it right, there are some very, very large and quick opportunities to take advantage of, as we've just seen with those three examples. As we've seen with the the average week slide, there are many news based trading opportunities in all time from in all time zones every single month, so you'll always get opportunities to trade Now, because of the economic calendar that we've looked at, you can plan your trades well ahead of time. So with this style of trading time is of the essence, we want to get into trade as quickly as possible after an economic news event.

So what we want to do is plan our trades ahead of time. So essentially, all we're doing is clicking the button when an economic news announcement takes place. So we can be very proactive with our trading approach, because we've got an economic calendar, which I will show you in due course, that gives us the ability to plan well ahead of time. And when you do that, you will be trading alongside the big institutions, the big banks, the big hedge funds, and this is what we call smart money. It's the professionals that we want to trade with, and not argue against. We want to follow and replicate their approach.

They will have their screens with live news feeds coming through all the time, that they'll be using to take advantage of we're going to replicate that do exactly the same thing so we can piggyback their momentum. And when you get it, absolutely Bang, bang on and you get your trading plan, right? moves a highly probable in one direction. And you often get large and quick moves, which is ideal for a trader, because as a trader, we're speculating on direction. So we want to get that direction, we want to go into a trade where that direction is highly probable, either as a buyer, and we want the market to move up, or a seller and we want the market to fall. And when you get your trading plan bang on, then really, it's almost inevitable that you're going to squeeze a profit from that trade.

So I'm going to wrap up this particular lecture here, because now it's all about getting into the nitty gritty of how we work out our trading plan, and find the very, very best opportunities and the very best currency pairs to trade. And we'll cover that in the next few topics.