So over the past week or so I have kept a trade open for a few days as I follow a trend.
My concern though is with important economic news being released on a daily basis throughout the week. I always get nervous that on the news being released the price will swing away from me during these times. I’ve been lucky this week that this has not happened. If you day trade i guess you can close positions or just wait for the new to be released. For those who trade the daily charts, do you close out each day due to the news in the morning possibly going against you, or how do you plan against fundamental news causing you issues when the trade you have open is a long term (2 or 3 + days) trade.
I was thinking that I should set some wider stops so that during these news events at least I wont be stopped out. Is this a plan some or most long term traders apply?
I think the hard part about answering your question is that so much of this stuff is ‘It depends.’ A general rule is that if the data release is a high impact event, either stay out completely or just reduce your exposure (so leave smaller lots on). Otherwise, if your longer term analysis is correct, then small events that might go against you usually just end up being annoyances rather than real threats.
If you could describe some of the specifics about your approach and what exact concerns you have (maybe some examples that come to mind?) then I could try and help a bit further than that
So an example would be that I am trading the USD/CAD. I went short on the trade (believing the CAD to strengthen this week) and so far the price has gone in my favor by 35 PIPS. Looking at the Economic Calendar for the week I see that on Friday the USD Advaced Retails Sales comes out on Friday at 8.30am ET. This is believed to be HIGH importance. I’m now thinking should I close out this trade before the news this week or do I stay in the trade if its still making me profit up until that point.
I read somewhere the following quote regarding economic news:
[I]“The most fundamental thing about news trading is that one should remember to react, not predict.”[/I]
If I’m already in a trade with a pair that will be affected by the news then I guess I am predicting and not reacting on the news.
I hope this helps explain my concerns on how to approach this.
