Anyone have any suggestions on how to avoid slippage on news reports. I have made several trades in a practise account that have jumped around 20 pips from the current price to where I am actually filled. What can I do to avoid this???
There’s a simple way to avoid slippage during news time – DON’T TRADE THE NEWS!
I don’t know why newbies don’t listen to this advice. Instead, they continue to look for the quick money, and end up losing theirs in the process. :rolleyes:
News time is very volatile and should only be traded with experience. You’re lucky you’re only being slipped by 20 pips. I’ve seen prices jump 200 pips in less than two minutes, and no stops get triggered because of it!
Do yourself a favor and learn to trade profitably first before trying the most volatile period during the news.
Terry
Terry,
When you say “newbie”, it definately refers to me. I have had some experience trading stocks and actually do quite well at covered calls. (It is my conservative approach). But from what I can see, the FX is an entirely different game from the two weeks I have been studying it. Actually, you are the first person to give me advice concerning FX trading strategies. It just seems to me that there are so many news events that take place in the FX that I need to understand what will happen before I can start trading live.
For example, you say a news event can cause a 200 pip slip. If I am already in a position prior to the news event and there is that much slippage, then from what you are saying (or at least, what I understand you to be saying) is that I must exit every trade prior to a news event, otherwise, I could find myself well below my stop loss without my stop loss filling. Is that right??
If that is the case, then the FX is all about trading news, weather you what to or not. I am not trying to be arguementative, I am just trying to understand. So, please help me understand where I am wrong.
SDS
Hi SDS,
Possibly your best move would be to read this.
Then if you are still thinking of trading news then
this is the fundamental calendar
http://www.forexfactory.com/index.php?page=calendar
learn it backwards & forwards.
Trading the news is a difficult pursuit for the most experienced
traders, so learn some technical analysis first.
If after your studies you decide you still want to trade the news, trade it once the report is out. Most of the damage to your account will occur if you attempt to trade it right at the release time. For example, expecting to get consistently good fills while trading the jobs report (NFP) Friday one minute after the release is a recipe for perpetual disappointment. In addition to bad fills you get many brokers who don’t guarantee their spreads during news time.
I think a smarter way to go is to let the news come out and let the market establish some kind of directional bias and wait for the initial “spikiness” to settle. Then enter based on whatever your rules/system dictates. Alot of people i know refuse to enter a news trade until at least 15 minutes after the report. At that point you should not have problems with fills or spreads
No problem, I understand what you’re saying. It wasn’t my intention to berate you. It’s just that most newbies head for the “quick buck” of news trading and end up losing everything.
In a sense, all Forex trading could be considered “trading the news”, since currencies are affected by economics. However, trading the news generally means specifically trading at the time of the release of an economic report. Some reports have much more influence on the markets than others.
daydreamer and pipbull have already given you some good advice. If you go through Babypips’ free school, it will give you a better understanding of the Forex market, including news reports. Also, study the calendar. I also use the one at Forex Factory.
Generally speaking, while I won’t enter a new trade before a news report, I usually only exit a current trade if it’s a major report (such as the NFP), as major reports can cause quite a havoc. Everyone is different, but just do yourself a favor and get very familiar with Forex before attempting to trade the news.
Once you’ve gone through the school, feel free to ask any questions to help clarify things and refine your strategy. There are a lot of helpful and experienced traders in here.
Terry
Thanks for all the advice. With the few news trades that I have practised, I have learned that I need to wait before entering the fire, but I have not been waiting long enough. I’ll do a little more practising and be back for more questions.
Again, Thanks
SDS
on trading the news i am a newbie so please take what I say with a grain of salt as i could be wrong in my approach and would appreciate any constructive advise. here are my rules for trading the news.
- check for news releases everyday and what their effect will be as some releases will have no effect. others will have a huge effect.
- never enter a trade on the initial release.
- if I am already in a trade determine how far into it i am and can i set my stop to avoid bieng taken out. also has this already been factored in.
Also remember I am still demo trading. but this has worked for me thus far. also I have noticed that the market will grow quiet when a news release is major.