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News Headlines Provoking Volatility in the markets

Fri Apr 23 2021 10:37
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News is an important factor in trading markets. No matter what trading market it is, there is always market news. Some types of news move the market, but some of the news headlines directly provoke volatility in the market. 

As a market trader, you need to recognize such types of news headlines. It is not certain that such headlines are only related to the trading market or the financial instrument you are trading. 

Headlines can affect different financial instruments and trading markets. The most common aspect that is affected by headlines is market sentiment. In this post, you will learn how headlines can cause changes in your trading portfolio. 

If you analyze the headlines properly, then you will trade currencies or stocks more profitably. Here you will learn how to analyze different headlines for profitable trading.  

What kind of headlines provokes volatility? 

You need to know what kind of headlines provoke volatility. There can be many reasons why volatility is provoked. Any event or financial activity that takes place in the market can affect volatility. Liquidity and volatility of a market are two important factors that affect the price of financial instruments along with the market sentiment. 

When there is high volatility in the market, it becomes difficult for an inexperienced trader to trade profitably. But volatility trading for beginners can be easy and profitable if news headlines are viewed and analyzed properly. Below are the main types of headlines that affect volatility.  

Economic Recession 

Whether an economic recession is imminent or has just occurred. The headlines related to economic recession are the most influential news for the market traders. 

All traders who want to trade profitably even in a recession can use volatility positively. But there are very few chances that the economic recession can be used to make profits in the trading market.  

Changes in demand and supply 

Changes in the demand and supply of a trading asset or a related consumer product can also affect volatility. There is high volatility in the market when there is high demand and supply. However, sometimes lower demand and supply for some products can also lead to an increase in market volatility.  

Industry specific headlines 

All industries have specific headlines that are released almost every day. There are ups and downs in the specific industries. It doesn't matter if that industry affects a specific group of stocks or shares or if it only affects a currency in the forex market. Industry-related headlines are important to track. 

Expert reports 

Expert traders, expert institutions and financial authorities publish various expert reports related to the economy. These expert reports are also useful for traders. 

It is difficult to read all these reports by yourself. But the news publishers always provide a summary of these expert reports. Such reports and their summary can influence volatility.  

Analysis reports 

Many financial institutions analyze various markets and their financial instruments. Analysis reports on trading instruments can also increase volatility in the market. If you don't have much time to read these analysis reports, then you can just check out the news about various analysis reports.  

Financial Policies 

Financial policies and their headlines are also important for the market. Various financial regulators, financial authorities and governments publish financial policies to make sure that everything is regulated. These policies are important and their headlines are also important to check as a trader.  

Market Specific News Headlines 

Apart from the market news and current headlines mentioned above, there are also some market-specific headlines. These headlines are related to specific markets. It is important to look at the news about the global market and all markets. But it is even more important to know events and activities about your specific market. 

Therefore, you need to find out what headlines are moving the market where you trade stocks, currencies, cryptocurrencies or commodities.  

Stock Market 

Stock market news can be about the top companies that are doing well in the market. There is also news that relates to the top companies that participate in the benchmark of the market like S&P, Nasdaq, etc.  

Forex Market 

Forex news is also important if you want to see what headline increases market volatility in the forex market. These headlines can be a price drop or a price rise in a particular currency, etc.  

Commodity Market 

The commodities market can be affected by headlines more than any other type of market. Commodities such as crude oil, agricultural products, and precious metals are directly consumed by consumers. 

For this reason, they are more influenced by supply and demand. Any headline about the demand and supply of commodities will cause volatility.  

Cryptocurrency Market 

The cryptocurrency market is unregulated and centralized. It is one of the largest decentralized markets in the world. This market is not so much influenced by demand and supply. The volatility of the cryptocurrency market can be affected by technological updates, blockchain developments, etc.  

Case in point: pandemic-related headlines 

Now you have an idea of what kind of news headlines can cause volatility. Regardless of what market you are trading assets in. You will see that headlines always cause volatility and liquidity. 

You can understand this by looking at a recent case study based on practical events. The case study of the pandemic or COVID -19 is best for understanding the role of headlines in increased volatility. 

COVID-19 case news 

The headlines on COVID-19 cases provoked volatility in various markets. As there were more cases in different countries last year, more volatility was seen in different trading markets.  

Less production news 

With fewer manufacturing units operating globally, fewer consumer goods were produced. Headlines of lower production also impacted volatility in various markets.  

No transportation news 

In some countries affected by the pandemic, there was almost no transportation. Due to less transportation or stalled transportation news, the headlines of various industries were stalled. And some industries experienced a rapid increase in consumption and sales. So these headlines also affected the markets.  

News of falling demand 

The demand and supply chain and headlines related to this news also increased volatility. News about a drop in demand related to various consumer goods is also important as it affects volatility.  

Summary - News Headlines Provoking Volatility

News headlines are important for traders to consider. There are different types of news headlines. Some headlines always provoke volatility in the markets. While some other types of news provoke liquidity and investment. Volatility brings risks to market trading. 

However, there are many ways to make profits in volatile markets. As a trader, you need to know what headlines make markets more volatile. And you also need to know how to trade assets in volatile markets. 
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