Managing trades around high impact news

Hi
i’m unclear on how to manage high priority news events with technical trading. I have a few questions:

should we worry about ALL high priority news events on the economic calendar and avoid trading around any of them, or just SOME (if so which)? i’ve noticed some high priority events don’t effect price action at all. and in a given week, you can have many high priority events occurring for several currencies, so that would leave me with little opportunity to trade if i paid attention to all high priority events.

how many days b4 the event should i avoid trading that currency? e.g. if USD NFP coming out tomorrow, maybe i shouldn’t be trading any USD daily charts for the last 2 weeks (you can’t get much profit on daily chart in 2 weeks time i guess). different though for 1h/4h trades.

my understanding is that if we are in a trade, we should close it (close profit or loss) say 30 min or 1h before price-changing event occurs.

many thanks
Harp

If that’s so, it means you can trade the USD only a tiny bit more than 50% of the time.

And given the high (direct and/or indirect) correlations between most other currency pairs and the USD, it arguably means you can only trade [I][U]at all[/U][/I], just over half the time? :15:

That would be quite some restriction, if you’re using daily charts?

Opinions are bound to differ (quite a lot) on this subject.

My perspective is probably very different from yours, Harp, in that (a) I don’t trade from daily charts, and (b) with the exception of “avoiding the news” (a principle I [I]do[/I] share with you) I believe that fundamentals are already included in technicals, one way and another, so for myself I would just be avoiding NFP days themselves, from a little while before the announcement until just after it.

lexys/(and others): okay, was just using daily time frame as an example (i’ll probably trade 1h and 4h mainly). but what about all the other high impact events on the calendar? in a given week, there can be e.g. 4 currencies with high impact announcements coming up in that week, so that’s a day here and there for each currency to avoid trading on. seems very restrictive to me (not as many opportunities). or maybe i should trade them as long as it isn’t NFP and rates.

There is no secret to this. I guess you would have to do the hard work by yourself and see what is right or wrong for you. I wish there is an easy answer. I only monitor one pair which is usdjpy. So I somehow know when it is volatile and when it is dead quiet. . It doesn’t run much from there. I avoid nfp.like lexy I traded on 5tf.i use tick volume.

Many technical trader they prefer stay away from the market if on the ay will released high impact news, because often after news has been released then making pair move very dynamic and randomly, someime after pair move down trend rapidly but not too long then move vice versa

lexys/bearish/anyone: i’m still not getting it. take last week and this week , there were about 3 weekdays with high impact USD events. plus some other currencies as well. i prefer major pairs. if i don’t trade on these days , or a day b4/after, not much time to trade is there? what am i missing here?

I [I]think[/I] what you’re missing is the fact that these occasional “high-impact news events” are typically responsible only for a few [U]minutes[/U] when you wouldn’t want to trade, not for a whole day.

Like Lexys says, these are usually only short term problems. Next time there’s a high impact event due pick a relevant pair and watch its behaviour, I.e. on 23rd June watch GbpUsd or Gbp Jpy in the hour leading up to the Brexit vote. What you’ll possibly see, regardless of what opinion polls say, is a heightening of volatility as the vote gets underway, possibly with Gbp slipping a bit as some traders move their money to safe haven currencies (like usd or jpy), then gbp rising if it starts to look like a landslide win for the Remain campaign.
By watching, not trading, you will be able to see the wipsawing of the market taking out stop losses left, right, and centre. As voting ends and a result becomes clear or gets announced, you can see the market settling down into a more normal pattern of activity.

I personally avoid the NFP and stay out of the market, i blown an account before when i first started hotforex, it cost me quite a bit, lol its more like a phobia, but maybe coz im not much of a news trader, but until certain of your strategy, stay away from such large news, best of luck.

You are not the only one and i am also in the same league :slight_smile:

The fact is that most of the traders get their trading accounts blown on the NFP and it is an event to just watch and not do any trading after all who w ants a loss…

Harpoon, did you by chance watch any dollar pairs during Yellens speech a few minutes ago? Good example of kneejerk reactions typical during news

Lexys/everyone : Hopefully I know what to do now. If these miscellaneous high impact events occur, and i’ve got trades already open, i’ll probably just leave them in. and if an NFP (e.g. coming week ) or some rates decision is coming up, i’ll close my trade (taking profit or loss) b4 it occurs

and if an NFP is coming up in e.g. a few days time, since I like to trade 4h trends, I might avoid trading them a few days before. e.g. if the NFP is on a friday, I might avoid trading 4h trends tuesday onwards. what might happen, is if I get into a 4h trade on tuesday and it’s about -1/2R on the day before the NFP, then when the NFP comes up I might get smashed. That’s my (beginner) thinking anyway. Let me know if i’m wrong. sorry for maybe sounding boring here.

THANK U

Eddie:i didn’t see it, but I looked back at charts and saw big pip variations for NFP and rates decisions. Moves of hundreds of pips…

(timeframe: 1h and 4h mainly)

Let see on next week many trader that based on fundamental analysis they will stay focus on NFP news, this news included as high impact and often makng pair move rapidly and suddenly, many technical trader will stay away from the market because they ften fail on these time

If you are a technical trader, then you should stay away from trading during high impacts news. Inter day traders have to keep themselves aware of high news that can easily change the course of any trend.

High impact news are important this time is very sensitive , One should plan how he will manage his trades if he is going to trade at this time . He should plan for his risk and reward . Try to avoid time just after news release because market can turn any side.

If a trader is too afraid of trading near high impact news or he don’t know very well about news trading, then he should close his trades before any high impact news.

You are thinking quite right that we should close our trade before price changing events occurs, it is because that managing trades around high impacts is pretty difficult for the newbies as well as experienced, so be careful for fruitful results.

You can trade anytime you want there is no limits in gaining experience just practice and make conclusions why you can or can not trade during certain times. Recommendations there may be misleading during to personal lack of experience. Always keep that in mind. Trading is something that doesn’t lay on the surface. Try to dig deeper where others stopped…
It also concerns news trading :wink:

In my opinion, trading when there is no high impact news. Its like a Hunter trying to tame a Ferocious wolf. When there is High impact news like NFP for example, its akin to face off with a Tiger. What are our options? Well, we can fight it, run away or hide from it. The person who choose to fight it may lose on 1st attempt due to lack of experience. After fighting the beast many times, the hunter will eventually find ways to tame it. It is just a matter of time. However, if we do not choose to fight it but run away, the hunter will never be able to learn how to catch the beast.

Let’s talk about NFP, volatility is to be expected during NFP. The main problem is getting whipsawed. So how do we avoid that? The moment just before NFP is like spotting a Tiger from a distance and with every second the clock ticks, the Tiger move closer and closer towards us. Our adrenaline start running high. Our heart beat faster. What are the odds if we fight the tiger head on with our bare fist? Our survival chance is vitually close to zero %.

Therefore, i do not recommend anyone trading during the NFP. There is almost no way we can win. In the olden times when guns are not invented yet. The villagers went to hunt the Tiger in groups. The 1st group of hunters will fight the tiger head on to taunt and wear out the tiger. While another group of hunters rest and hide from view, and observe the brawl take place. It doesn’t take long for the tiger to exhaust itself. When the feel is right the resting group of hunters Strike! The beast becomes an easy prey to catch.

NFP is the same. Let the big traders exhaust themself. We only need to look at a 4 hourly candlestick where NFP takes place. After that 4 hours, if the current price break the high of the 4hourly candlestick, Enter BUY and vice versa, stop loss can be placed at the other end of the 4 hourly candlestick contain NFP news release. When the market is exhausted, its pretty much one direction for a period of time till the next high impact news shake it up.

1 Like

First off. To determine how to manage your trades around high impact news, ask yourself a question (What type of trader are you?)

Are you an Intra-Day trader? Swing Trader? Position Trader? Scalper? Subsequently, you’ll get the answer you want. For scalpers, scalpers usually scalp with a targeted goal in mind. For instance, if my goal was to scalp at least 100pips a day, I will scalp the entire volume/volatility of the 100 pips (Up and Down/During & After News). For Intra-day traders, generally the trades will be closed to avoid their respective trades from getting whip-sawed. BUT ! If you were to placed a trade for the upcoming news, that’s relevant and that you don’t have to closed it). For swing traders, news is generally “bullshit” for them. They don’t even bother to read it nor look at it as they hold their trades from days to weeks till the targeted profit hits. (Same goes to Position Trader but both Position and swing traders generally read the news to build a long-term sentiment and not care about the news data affecting their trades in the short term) This is because of a term used by the swing/position trader since 1996, “Fundamentals were incorporated into the Technical side of the market” which allows them to treat it as a form of “potential reversal” point for them to scale their orders in the long term.

I am speaking based on the experience I had on this so feel free to correct me if I’d written anything wrongly. Though, I strongly believed that almost all of the traders here had a different views on almost everything lol.

Best Regards,
C.