Last update 2020.10.18
Short term movements in the forex market are stimulated most by political news and economic data. The forex market is unique because it responds not only to U.S news but also to news from around the world.
Also, since the U.S dollar is often on one side of the major currency pairs, political news in the U.S tends to have more of an impact.
Think for example about a large number of relevant events in 2020. We have Covid-19, plus threats of wars with North Korea or Iran, an anti-capitalist getting elected in the US, cyber attacks, earthquakes, and so on. How does it affect forex trading? Have been this news so important for forex?
What you can learn ahead
- Why political news is important for forex trading
- What are the most relevant political events to stay aware when trading forex
- The impact of the US presidential election in forex
- How to improve your forex trading performance using AI.
Politics and trading. They run together
Geopolitical factors do continue to have a bearing on global markets, and, as such, it is worth being aware of the potential impact of the foreign policies of various countries. Commodities markets are especially sensitive to geopolitical changes, with the likes of oil and gas being hugely responsive to threats of military conflict in particular regions of the world. And political risk can often be a significant factor when deciding whether to invest in frontier and emerging markets. In such instances, portfolio diversification becomes especially crucial for the investor to ensure that the risk emanating from one market is limited and does not decrease overall return.
Experienced forex traders keep track of all the news releases by using one of several news aggregation sites to anticipate scheduled news events. Some of the more commonly used sites are investing.com, fxstreet.com, and dailyfx.com. Wiseinvest also provides a stunning economic calendar, which is possible to check the most important economic releases for trading in real-time.
All of these websites have economic calendar sections where a forex trader can research upcoming news.
With eight major currencies traded in the forex market, it is important to be aware of the political and economic releases for each county.
These releases can cover a wide range of topics. Some examples of topics that are generally most important are inflation, economic growth, interest rates, and unemployment.
Look through the various news topics on your chosen website to see which ones will be more beneficial to your trading plan. Additionally, news aggregations sites tend to rank news items based on the expected impact on a country’s currency. It helps to be prepared for the news reports because they may impact your trading.
You don’t want to be caught in a position where the risk is higher than anticipated and you are unable to withstand the impact that has on your trading profile.
Typically, traders observe news events in the forex market by noticing whether or not the reported news causes a currency pair to breakout from its recent period of consolidation.
Once this breakout happens, traders expect a trend to continue in that same direction for a period of time. The effect of a news-driven breakout typically lasts about a week, however, this one-week move can sometimes spur a longer trend.
These breakout trades can be a short-term intraday trade or span over several days. This is good news for Wiseinvest.ai users because they have the benefit of a built-in strategy. When a news event creates a breakout pattern, Wiseinvest.ai users can watch their dashboard for alerts and signals on that currency pair.
By knowing the news that has been released Wiseinvest.ai users can be aware of which forex signals will be more beneficial to them.
Fundamental analysis and the correlation with stocks
The wealth-management firm Fisher Investments recently revealed that during a presidential election year, the market is 17.9 percent higher on average when a Republican is elected but 2.7 percent lower with a Democrat. On the surface, this would suggest that Republicans are better for markets.
Dig a little deeper, however, and this hypothesis falls flat. Indeed, the trend is decisively reversed during the inaugural year of the new incumbent, with the market only 2.6 percent higher on average when the new president is a Republican versus a massive 22.1 percent with a Democrat. Conventional thinking would explain this trend by classifying Republicans as more pro-business, and, thus, investors feel more bullish when a Republican is elected. Once elected, however, Fisher noted that investors “begin to realize the new president may not be able to accomplish all that was promised on the campaign trail”.
A September 2018 study by the National Bureau of Economic Research revealed (NBER), following Trump’s election victory, “Republicans increase the exposure of their investments to the U.S. stock market relative to Democrats following the election. Democrats increase their relative holdings of bonds and cash-like securities.” So, purely based on the election result, Republicans increased their equity exposure, while Democrats plowed into bonds and cash.
Such human biases are ultimately what create errors in the investing process. Of course, investors are always going to have political preferences, but the fact is that Artificial Intelligence has been very helpful is this sort of scenario and we are here to help you avoid certain mistakes in trading.
Presidential election forex cycle
The presidential election cycle theory examines the connection between the 🇺🇸US presidential election, which is held every four years and patterns in the financial markets.
An examination of the association between US exchange rates (fx pairs with USD) and presidential cycles indicates a significant economic and statistical relationship. Research suggests the US dollar has shown greater gains when a Democratic president holds the highest office compared with a Republican White House.
The researchers found the US dollar appreciated during the term of a Democratic president but depreciated over the four-year term of a Republican president. This conclusion was based on a review of the years 1957-2016, using the exchange rate of the US dollar against several major currencies.
One explanation of this phenomenon is that Democratic presidents often implement policies that stimulate short-term economic growth and higher consumption, which causes the US dollar (USD) to appreciate. A Republican administration, however, is usually identified with a pro-business agenda, which may result in a weaker dollar. President Donald Trump has often said that he wants to see a lower US dollar in order to make US exports more competitive and has not hesitated to criticise the Federal Reserve for not reducing interest rates, which would cause the greenback to depreciate.
The Impact of the US presidential election in forex 💹
When we talk about US dollar performance, we are talking about a currency pairing, so let’s examine two of the most important currency pairs in forex trading. The first one is EUR/USD 🇪🇺 🇺🇸 – the most popular forex pair.
According to the theory we explored earlier, a significant change in the value of the US dollar on the day after election day is unlikely, but whether it will appreciate or depreciate in the months after the polls will be largely dependent on which candidate wins. If Trump wins, the impact on the euro (EUR/USD) would be a lower US dollar.
What is the easiest way to trade forex?
There are two ways to invest with our AI in forex without concern about political news and economic events.
1. Automated with AI-Trading. Check out the 3 steps to trade automated with our AI.
By trading forex automated with AI, you will save time and improve your performance without monitoring the market and managing trading platforms.
With Automated AI trading you do not need MT4 / MT5 and other trading platforms to invest in forex. All forex trades are automatically placed into your broker account every time that our AI system identifies a new worthy trading opportunity. You can monitor the AI trading performance in real-time directly on our dashboard.
Automated AI trading benefits
- Setup in 3 minutes.
- Totally hands-off, from anywhere.
- Invest from just $1.
- APY of 40% over the past 13 years*.
- Lightning-fast execution & no slippage.
- No commissions, no management fees.
- Portfolio with 40 different automatic strategies.
- No MT4/MT5 or other platforms required.
- Test with a risk-free practice account.
- Trading results directly on our dashboard.
Would you like to open a forex broker account? Our AI is integrated to trade automated with the brokers Oanda and FXCM. Click here to open an account with FXCM or here to open with Oanda. Those are some of the best forex brokers in the world.
2. Manually with AI forex signals.
Wiseinvest also provides AI forex signals that perfectly fit into MT4, MT5, and any trading platform. To trade with our AI forex signals, you must simply copy the data you receive from each real-time signal into any forex brokerage account of your choice.
There are five unique variables for each AI signal, and each must be copied exactly, to match the performance of the signal as close as possible.
Each AI forex signal alert consists of the following five data points:
- Symbol (forex pair)
- Direction (long or short)
- Position size (number of units or lots)
- Take profit (price level to exit with maximum gain)
- Stop loss (price level to exit with maximum loss)
Check out how to trade with our AI forex signals.
- Subscribe to a Wise-Plan.
- Open a Brokerage account. Check this article about the best forex Brokers.
- Set an amount and a position size on our Wiseinvest dashboard.
- Our AI will send you real-time trading alerts by email and Telegram.
- Copy the signals and paste into your Brokerage account.
All forex signals are sent every time that our AI trading system identifies a new trading opportunity. Our trading strategies are developed on a variety of time frames such as 4 and 8 hours.
Wiseinvest AI forex signals are Market Orders and you do not need the entry price. You can copy each signal while it is available on our dashboard. We do this way to assure that traders will just place signals while they are good to be traded.
You can trade forex with our free forex signals clicking here, or with our Premium subscription that provides you unlimited AI signals and automated AI trading in partner brokers. Whether you are a beginner or a professional forex trader, our AI trading system can help you save time and improve your trading performance. Get started with free AI.
When investing through Wiseinvest automated AI trading or AI forex signals, you do not need to calculate pips and change the leverage in your forex broker account. Learn more about leverage in forex trading by clicking here.
What is the AI performance in forex trading?
The Win Rate of our AI moves as shown by the period and can reach up to 95%. The introduction relies upon the capable wild estimation metric, which infers that our model is valuable at whatever point the Win Rate is more noticeable than 60%. All methods of our AI trading system search for stable returns and sufficient results to achieve an ordinary return of 40% consistently (APY), without the usage of high impacts.
We appreciate that what is significant in forex trading is the definitive result. Thusly, the money related master needs to consider that Win Rate isn’t commonly the best estimation to measure execution in forex, as other signals providers uncover. For instance, out of 100 trades, solitary 1 trade may be an adequate disaster to make the 99 trades not gainful. For this circumstance, the Win Rate would be 99%, yet the convincing result would be unfeasible (negative).
We revolve around the appearance of 40% of APY and not just on Win Rate.
It is essential to see that forex brokers may charge spreads, commissions, and overnight costs in your trading account, and these components can impact the AI execution. You can check our forex trading history to see more about AI trading execution by clicking here.
How much do I need to trade forex with AI?
You can start in forex trading with a free AI forex signals or AI trading record and make a store from just $1 in the broker. It is moreover possible to test using a danger-free practice account with our AI trading structure. Regardless, to do a capable peril, the board in authentic records, we suggest you start from at least $100. Notice that some forex traders require assorted beginning stores to trade forex.
What is the trading strategy of our AI?
Our AI methodology is the blend of different AI trading structures, with more than 100 features, that portray 40 particular procedures which simultaneously consider: Quotes of the 28 forex symbols, Supports, and Resistances in different timeframes, Trends and Counter-designs, Cross-markers, Index of each pair, Economic Calendar, Investors Sentiment.
Our AI looks at those fundamental, technical, and sentiment factors that impact forex trading, and all models are surveyed constantly using different burdens. In the wake of completing the examination, the choice of the signal transmission procedure is made considering the improved likelihood of flashing advantage and the total open for theory.
Using technical analysis, our count considers not simply the instances of various examples, including sponsorship and deterrent levels and cross-pointers, yet our AI is moreover prepared to make its own progressing record for each cash pair, that is used to recognize what is the best course and target.
Practically identical to fundamental analysis in forex, the AI makes an association inside the budgetary calendar to find news data that can impact express money sets.
Disclaimer: Forex and Contracts for Difference (CFDs) are complex instruments and come with a high risk of losing money due to leverage. Forex trading is not suitable for everyone. You should consider whether you understand how forex and CFDs work and whether you can afford to take the high risk of losing your money.
The forex brokerages displayed shall disclaim the overall performance of traders in their platforms. Oanda warns that 76.8% of retail forex traders lose money trading CFDs. XTB warns that 80% of retail forex traders lose money trading CFDs. FXCM warns that 74.74% of retail forex traders lose money trading CFDs.
The performances aforementioned are not related to Wiseinvest AI forex trading and AI forex signals system. You can check the performance of our AI forex system on our dashboard.