All of us use calendars of important economic events, such as at forexfactory, investing.com and others (if you do not keep an eye on calendars yet, it's time to start so that it will not too late). Thanks to such clear calendar schedules, we all know exactly when this or that news, this or that important economic indicator will be published. In turn, the world's leading analysts prepare their forecasts and assumptions about the dynamics of the forthcoming statistics publication, and the market takes into account these assumptions in the market price.
Whether we will see the growth or decline in the country's GDP, whether unemployment will grow or decrease, whether the central bank will change its interest rate or leave it unchanged - all this was predicted by analysts prior to the release of the macro indicator and has already been accounted for by market quotes of trading instruments.
So what’s to be done when analysts' forecasts turn out to be wrong? What should the market be if the predictions contain a mistake? Then the market will have to adjust its prices! That's why we see serious movements (spike) of currency pairs, passing at lightning speed, intensely and far.
News trading signals use this knowledge with the help of special software “forex autoclick”, which receives a real-time data feed from news providers, analyzes them and sends a trading signal to the trader.
Imagine that analysts assume an invariability of interest rate, for example, of the Reserve Bank of Australia (this is the forecast), but in fact, the RBA unexpectedly lowers the interest rate (this is the fact). There is a deviation (discrepancy), an error between expectations (consensus) and reality (actual), Australian dollar instantly falls! This is exactly what happened in May 2016.
There are a lot of such examples (just above, on this page, in the “Results” section you can see exactly them). The economists’ errors are behind them, and as a result – there is a trading signal as a consequence of the deviation of reality from expectation.
You can always find more information in our blog on the topic “news trading”.