I was just wondering if anyone out there has a method that they follow for trading interest rate announcements. I have traded one before, but I just jumped on the buying band wagon once it had taken off.
However, I was thinking it would be best to setup up a buy order and a sell order just above and below the current price before the announcement is released. This way you will catch the movement either way it goes. I was thinking of placing the buy and sell orders 20 pips above and 20 pips below the current price about 5-10 minutes before the release time.
I am not sure whether to do trailing stops or just babysit it since I only plan on being the the trade for a few minutes.
Some folks do use that sort of bracketed order strategy to catch a post-news reaction. It’s great when the market takes off and runs without ever looking back. It’s a nightmare, though, when the market first goes one way, then goes the other - or when the market just chops around.
Playing the news is a tricky game. The only way to really get it right consistently is to understand what the market is expecting and how it’s positioned going into the release. Even then you can get burned.
You don’t stand a cat in hells chance. The broker software you’re likely trading out of simply isn’t anywhere near stable or robust enough to do what you’re expecting it to do.
You’d be far better spending your time planning a method that offers you far better odds of staying alive than that pipe dream.
Trading news is a b-witch! The brokers usually increase their spreads quite a bit during news releases and that will hurt your entry price. Try waiting and watching for the after effects of the news. 10min to 30mins after the news lots of times you will see a strong trend developing as a results of the news. That’s a good time to look for an entry and follow the trend.
