To stay on top of your trading game it is key to keep up to date with global financial and geopolitical events. Such events are often capable of causing large market movements, and can often take traders by surprise.
Although there is no certainty that a particular news release will affect a market in a specific way, knowledge of current events can prevent you from making basic trading errors, helping you to minimize losses.
For example, elections have the ability to significantly impact the relative value of a country's currency. The political instability and uncertainty present during an election period often results in a greater volatility in the value of a country's currency.
Forex traders often monitor pre-election polls to gain an idea of what outcome to expect – although, as the 2015 election in the UK showed, pre-election polls are not always accurate. A change in government can mean a change to a variety of different policies. For instance, a new approach to spending may influence a currency's value. In addition, political parties viewed as more focused on promoting economic growth may well enhance a currency's relative value. If a party seen as good for a region’s economic growth is at risk of losing its position in power, traders may sell that country’s currency, with the expectation of future economic decline.