Hello again,
‘Leopardos’:
Well I’m happy to help you although I cannot agree with your statements i.e. trading the news the way you are to ME is a lot close to ‘gambling’ than trading from the charts (price action) or using a decent technical trading system but hey: that’s just me. Obviously I don’t trade ANY sort of news i.e. I’m a long term trader (days, weeks, months). That doesn’t mean that at some point in time I tried to do what you’re doing (on live accounts) and, well, I can tell you that it never worked me not even on one trade. But: we all have to learn I guess i.e. I just hope for you it’s not the ‘hard’ way. PipBandit is quite correct: open a live account and start with $100 before you ‘plough’ some serious money into this news trading ‘system’ of yours. That would be my advice also. I very rarely trade forex (if at all) so again as far as capital requirements are concerned you’re asking the wrong person here although that being said: you know that you should never be risking more than 2% of your capital on any single trade so you simply need to take a look at your ‘system’, see where your entry and exit points are, see what the risk is, and ensure that the risk is no more than 2% on any single trade. Only that way can you work out what your capital requirement is going to be. One problem though: there is now real way of managing your risk trading the news as you want to do it because of all the ‘unknown’ factors i.e. you can never be sure where you’re going to get ‘in’ on a trade and even if you do get ‘in’ on a trade you have now way of knowing whether or not your market order is going to be executed at your price and even if you HAVE the time to set a stop loss you have no idea whether or not it’s going to be ‘slipped’.
Somebody forwarded this to me only today oddly enough. It comes directly from another well known broker with an equally fine reputation (and it’s probably a better explanation than I’ve given you):
[I]‘What is the NFP report?
[/I]
[I]Of all the world monthly economic reports, the monthly U.S. Non Farm Report (NFP) is the most highly anticipated and has the most dramatic impact on the currency market.
[/I]
[I]The report, which is released on the first Friday of each month and states the previous month’s numbers, provides detailed industry data on employment, hours and earnings of workers on nonfarm payrolls. These numbers are the best way to gauge the current state of the US market as well as the direction that the economy is heading.
[/I]
[I]What’s more, the employment numbers provided by the report are used by the Fed to shape their interest rate policies. The health of the U.S. economy and interest rates translate to the strength or weakness of the U.S. dollar.
[/I]
[B][I]Risks Associated with Trading Off-Exchange Retail Foreign Currency During Economic News Announcements
[/I][/B]
[B][I]As with all major economic releases, there could be significant price volatility with this announcement. Currency spreads will typically widen just before the release and will remain wide for a few minutes after. If the announcement is a shock to the consensus estimate, the price of the currency pair could gap significantly. For example, the price on the EURUSD trading at 1.2820 - 1.2822 just before release could gap up 60 pips to 1.2880 - 1.2882, without any available prices available between the price of 1.2820 and 1.2882. A Buy Stop placed before the announcement at 1.2830 would turn into a Market Order and would be filled at the prevailing price 1.2882. The same would be true with a Sell Stop.
[/I][/B]
[I][B]Approximately four years ago we saw a gap of approximately 200 pips on the GBPUSD on a Non-Farm Payroll announcement. While this is an extreme example, it nevertheless is a possibility with trading during economic announcements. Consequently, plan on the spreads widening and, if you are trading with a Buy or a Sell Stop entry order, do not anticipate being filled at your entry price. You will be filled at the prevailing market price after the release, which could be significantly different from your desired price of your entry order.
Please be advised that due to the volatility of price fluctuations during the news, it is possible to see a delay in execution due to the additional verification necessary for each trade.[/B]’[/I]
YOU HAVE BEEN WARNED!!! LOL!!!
‘PipBandit’:
It’s odd you know. When I started out I didn’t believe in demo accounts myself (I probably traded a demo account for one week before opening a live account). I learned ‘bad habits’ trading LIVE accounts and looking back I’m sorry that I didn’t demo trade for a LOT longer before ‘piling in’ LOADS of cash!!! It’s sort of ‘damned if you do and damned if you don’t’ kind of thing I guess!!! LOL!!!
‘dusktrader’:
Thanks for the information. Yep: that’s pretty much the same thing as happens here. I forgot about ONE thing: probably a Bloomberg Professional Terminal would ‘do the job’ (that’s supposed to be ‘top notch’). That is, of course, if you can justify the (monthly) costs (they CERTAINLY ain’t cheap but I WANT ONE ONE DAY)!!! LOL!!! And as with you: I don’t trade the news either for all (and more) of the reasons mentioned above!!! That’s a ‘mugs game’ unless you have the PERFECT setup and a lot of experience (and ‘big ones’)!!! LOL!!!
But you know what: as the years go by and especially of late when I read some of the threads I find myself saying ‘each to their own’. If this works for this guy then great (so far as I am led to believe there are indeed some very successful news traders although I’ve never personally met one). I mean to say: I now believe that there’s no ‘right’ way or ‘wrong’ way to trade as long as it’s profitable over time. Yes: there are some very basic rules to be followed e.g. risk management etc. but there probably are as many ways to trade profitably as there are markets to trade. I mean to say: of late I find myself worrying that some of us may be giving the incorrect advice to the next Jessie Livemore!!! You know: that type of thing. LOL!!!
Regards,
Dale.
