Does anyone trade economic news events?

In most forex forums, you would see a lot of trading systems based on price actions, indicators and other means of technical trading.

Anyone has experience with a trading system based on fundamentals?

For example, lets say this evening 26 march 2000 is announcement of unemployment claims which would affect the USD.

Does anyone like track the figures and come up with some sort of method. Lets say last figure was 646K, the forcasted is 649K (ie more people going to be umemployed), but if the actual figure is 650K how much USD will go down?

or if it is 640 K (better than forcasted and previous), how much would USD go up?

Or normally we just trade in the general direction?

(yes, I know some trade tracking fundamental then execute on technical)…but was just wondering if anyone using a method that is pure fundamental (sort of like warren buffet)…it news figures tied to USD value.

Thanks

In a small way I would say we all dable, or should I say more
experienced traders, dable in fundamentals, but there are lots
of disadvantages to dissuade small traders from this persuit.

High spreads

slow execution speeds

large stop losses

high risk trade

to name just a few.

The smartest play from a retail traders perspective is to get
technical analysis down pat, then & only then demo trade a
system of fundamental trading.

Warren Buffet with his finances possibly doesn’t experience these
effects.

I could be wrong, but I don’t think there are many people that take such short term trades based purely on fundamentals other than the actual number itself. The only scenario I could see someone logically trading like this would be if they were 90% certain that a data release was going to be more or less than forecast. Even still, this would be nothing like Buffett’s style of investing - his style would be more akin to buying a currency pair he thought was undervalued for whatever reason, and then holding it for 20+ years.

Most people are enticed by news releases because of the large moves they precipitate, but the reality is that along with these large moves comes violent whipsaws and unpredictability. If you can nail a method that consistently makes money trading the news, go for it. All I’m saying is that personally, I prefer to stick to a simpler, more certain and less risky method.

What I am trying to get is finding a way to equate pips to news. For example, 475K unemployment vs 474K unemployment, the 1K difference lets say someone valued it to 100 pips of USD.

Then on news day, place a long and short order (one cancel the other), profit target 90 pips, stop loss 10 pips. Then just wait for the news to announce and BAM!

It sounds like a good idea, but the only problem is that like I said, price will whipsaw around both ways even before it gets released, so your order could be triggered when you didn’t intend it to. And even if it did, price could go 70 pips, then reverse and take you out in a flash. You just don’t know. What’s even worse, what if it works out twice in a row for you and then you end up betting your account on the third one and it fails? I’m not trying to burst your bubble, but just being realistic because I don’t like hearing about people getting burned - and believe me, I’ve heard my share of stories about even pros blowing up their account over a news trade.

There are a couple ways I can think of to try to predict price change in relation to a fundamental number. The first would be with econometrics, and the second would be to simply take historical data and put it side by side with news releases; I would take into account the percentage gain or loss, not just the pips. I would go with an econometric model if you’re familiar with it because that will give you more detailed information about the reliability of your estimate. Personally, I’ve seen enough news releases to not really believe that any model could predict price consistently, but that’s just me. Give it a shot and see what you come up with - we’d be interested to know, at least I would.

In my experience the market USUALLY moves in the direction of the current trend when news comes out. Let’s face it, the world’s biggest and most heavily funded traders most of the time KNOW what the news will be and they are in early, pushing the price up/down.

If you can find a small pullback off trend 30 mins before news and take a quick scalp, the times it works and goes your way and you’re up 20 to 30 pips, then hang on for the news as it will often give you another 50-80+ pips more for very low risk, just put your stop right under the swing of pullback you entered on.

Then on news day, place a long and short order (one cancel the other), profit target 90 pips, stop loss 10 pips. Then just wait for the news to announce and BAM!

The above if I remember right is called a straddle & the brokers
have ways to counter it.

Nothing is new, it has all been tried before.

With a s/l of 10 pips you would be stopped out
a lot more than 9x

Also just because a news release says it will go one way
does not guarantee it, sometimes the price can be factored in,
then the price moves the other (wrong) way.

If news trading was simple we would all be doing it, but it ain’t.

Learn to trade with tech. then slowly factor in news.

In my experience the market USUALLY moves in the direction of the current trend

:lmao: This is a bs statement, obviously your experience ain’t much.


“There is always somebody who thinks they can ice skate up hill” Wesley Snipes in Blade

:wishes: daydreamerforex

Probably 10-20 years back would be good to trade purely on fundamental…

but since retail traders are growing everyday, which i think it has grow the influence to the price movement in term of technical aspect.

i would say its important to pay attention to technical + fundamental…

I am not the most experienced trader but that idea of trading news be careful i have tried it and i have made but have lost and that idea of doing a long and a short watch out mate and it goes one way then stops you out so you lose on that one and you think its going the other way then bam it changes and then goes the other way very quickly and you lose both trades ,sorry mate there is only one way to trade and that is check the fundamentals and the tech for me ,forex eclipse if you find them your edge is on par and your chances are much higher
Eric the Viking

Hey, I trade Economic news events and also several other types of news. I currently trade news in the futures, stock and binary markets. I’ve tried and tested snw elite, aurora speedster and forex news gun auto clicks. I’ve also tested several bracket software’s and forex ea’s. In answer to your question there are several free forex calendars online that will let you see the deviation and also show you how large the spike was. You’ll just have to do a lot of research to determine safe levels to use as take profits. Forexpeacearmy and newsimpact both have features that will help you.

To counter the broker manipulation I had to look at other markets. I started with a free demo in the futures market and never looked back. For NFP news for example my slippage on entry is usually between 3-6 ticks but in forex it was between 30-50 ticks. Of course this is based on a specific instrument that I use for u.s. releases but its a good example. I do personally know 1 trader who is very successful in trading news in forex but he uses the auto click method and combats broker manipulation by managing 30 or more broker accounts each time he trades. It is possible to profit from news in forex you might just have to carve out your own path.


-Futures, Forex and Stock News Trader-

Yeah, I have to say that if you’re going to do news trading, retail forex is the worst to do it. Spreads are usually terrible and getting stopped out is easy. Nadex binary options could be a choice (seeing as you can’t really get ‘stopped out’; if it doesn’t reach your price by expiration, you don’t get paid. If it does, you get paid. But if it whipsaws in the meantime, doesn’t matter).

Alternatively, futures would allow you to get in without spread, but only if you can actually get a fill which will be a struggle as well.

Just know that you’re fighting against algos which can react ridiculously faster than you can :stuck_out_tongue: Factor that in with positioning, some gaming by large entities, and underlying things you might not be aware of (like how for a while last year, good US news would actually hurt US equities because it meant more likely taper which was seen as bad for equities…so it’s not always a simple, good = higher / bad = lower kind of thing).

I do pay close attention to news events when making trades, either to know when to adjust my exposure or take advantage of short-term bursts in volatility. It’s helpful to look at past price action to determine which events are tradeable or not.

I actually use Nadex now to bracket the market for certain releases. I use their spreads for certain trades and their binary for certain trades. I’ve found that if im trading with spreads its usually pretty easy to get back to break even if there’s a muted reaction. I try to focus on news that moves the market 50 or more ticks/pips regularly and I also use take profits with all of my spread trades.


-Futures, Forex and Stock News Trader-

Trading through news events are for the major players.

The number that comes out is largely irrelevant, it’s peoples reactions to that number that matter. So often the number will be released positive, but the spike will be in the opposite direction.

This is because the major banks are pushing the market - hard.

I was speaking to one of my brokers today about NFP and asked whether many of their clients participated. Apparently HEAPS of retail traders participate and almost all of them end up losing money.

My advice - stick to price action and leave news announcements to the banks.

I have to completely disagree. I have yet to lose money on any economic/news release (except for ones that have caught me off guard with already open trades). You can always make money, even when the price movement is counter intuitive. And you can amplify the growth by scalping the correction waves. However, as I’ve said before I have only used demo accounts, but a good enough ECN should not be that different (or so I hope).

Wow, you must be doing something correctly if you haven’t lost yet trading news. I trade live and have taken losses but my winners always outnumber my losses by a large margin. You should start testing live with small contracts and see if your system continues to work. Demo doesn’t really give you a real feel for things.


-Futures, Forex and Stocks News Trader-

Maybe I just don’t have enough experience yet, and my beginners luck is still helping. I’ve been trading news for about 3 months (only the big news, and only American news). I traded about 18 events so far. 3 of them were counterintuitive, and I had guessed the direction incorrectly, so I closed the order at a loss and doubled down on the correction waves, which more than made up for the loss of the first trade. This is why I don’t think you can go wrong if you trade the news. However again its only demo without slippage. I plan on opening a live account next week. Hopefully my luck will continue then fingers crossed

That is my favorite time to trade. I don’t enter too often on initial data, but look for technical levels to trade after a release. Something like a surge in either direction looking to buy support/sell resistance.

Sounds good Zaghloul. I know several people who trade after the spike and wait for a pull back of the initial move then enter the market in the direction of the spike. From what I hear that method works very well but I haven’t tried it yet as im always out of the trade before they get entered. If the news comes out with a strong deviation I can see why that method would work well. Just have to stay out of the whipsaws. I guess its just preference.