I only trade based on technicals and analyze my charts for trading signals, but I think it is important to keep up with interest rates decisions by central banks as currency pairs will move. The moves may be temporary, but it can offer better entry levels to trades which is why I always keep up with developments out of central banks (not just interest rates, but other monetary announcements as well).
Do you keep up with interest rate decisions?
- Thread starter Rambo35
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I too trade technicals only but also keep my ear to the ground on central bank decisions and developments. Its my way of checking in on the status quo' and being prepared if the currents shift in any way.
Even traders who trade only technical signals usually pay/receive overnight swaps, so following interest rates is not completely useless to them.
I suppose forex strategy should combine technical and fundamental analysis and not just bank on one of them. It is lop-sided development which will bring you to impasse. Revisions in financial world, especially in banks field definitely have an impact on forex price movement. It is most effective to use in binary options trading.
I wonder if a bad turn on interest rate would prevent a trader from opening a position and leaving it over night when there is a good chance of making profit. It is not useful to follow interest rate.
Heck yes, the market often gets volatile depending on the news..for eg, the Fed announcements, esp the first one regarding tapering..that sure kicked in. Irrespective of whether the trader uses only technicals to trade or not, it makes sense to check the news..
Interest rate is a part of cost of trading - the same as the spread is. If you do not consider it in your trading, you either have a holy grail system, which is good enough to beat any cost of trading, or simply keeping yourself ignorant that not all your trades are going to be profitable and there is no telling, which one will be, while the cost will be paid on each of them.
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