I traded the news for the first time yesterday. I chose the FOMC report, thank you Mr. Bernanke, the experience wasn’t stressful a part from delay in processing the order and when it was finally processed the spread must have been super widened. I executed the sell of EURUSD at point A in the chart below, it was actually processed to be at point B.
I manually exited at point C only to find out today that I could have done better.
Thinking that I got the concept of trading the news, I sold EURCHF after the SNB report and the result was not so pleasing. Here is a 15 min chart to show what happened thereafter.
Well, I would say it really depends what you are targeting:
If you want short rem profit then yes you made the proper decision and grabbed 50 pips, so well done. But get a proper broker that will be able to properly execute your orders.
But the point is that it was a very very important decision that people have been scared of for months. It will definitely have an impact on the dollar in the coming weeks. Look what happend last year when QE3 was announced. GOld neede a few weeks before topping a $1,900 (ie USD very weak). So yes, the initial move is really strong, but I think that the news is not totally priced in yet and that we will see the dollar strengthen over the coming weeks. Of course, this is not 100% absolutely sure, and it will strongly depend on employment and inflation figures in the US. Bernanke reminded that he could take further actions also if the economy do not recover.
Regarding the SNB, I do not really know what you were looking for? They just confirmed that they will keep the 1.2 threshold. So what were you exactly expecting from this? Or maybe I missed comehting (sorry, I’m not really into CHF)?
And yes, trading in those bumpy conditions is quite difficult, and especially when someone is talking and that prices go up and down on every statement the person makes. So unless a very strong statement is done (like yesterday), I would definitely wait the end of the speech to enter a trade with the related currency.
hehe … yea trading the news is highly discouraged. The biggest issue here is that almost all established brokers won’t guarantee order execution or price commitment during news release hours.
If you are serious about trading, I would recommend grabbing your hands on a trading system and follow it religiously. Or just find some established alert service that is consistently profit and follow their trades.
I’ve been trading news for a while now,and I just realized my broker is not suitable for me.Just like in your picture,they kicked my price (requote) to the peak before the price reverse and hit my stop loss.If the price didn’t requote so far, I would have gotten 30,40 pips.This usually happens.
Its really important for news traders to pick brokers that doesn’t bother your price when its news time.
I have a real simple method of trading news announcements. I swap down to the five minute charts and wait for the first five minute candlestick to close after the event. If there is a clear bias to a direction, I jump in with a 50 pip stop and ride whatever momentum is there until it seems like momentum has stopped, price retraces, or it’s hit a 3:1 return. For FOMC, I hit a clean 3:1.
The thing I’ve found with trading news announcements is; you can do it but you don’t want to over-extend your stay. You want to take advantage of whatever volatility and directional bias may (doesn’t always) exist and try to ride to the end of it. You have no way of knowing if this is going to kick off a new trend or if the price will correct. So you back out when you can take the money off the table the market wants to give you.
You may want to research “Trading Break Outs” because it’s a very similar approach in general other than the fact that you typically don’t stay in the market very long at all. I think I was in the FOMC trade for not even an hour.
Trading profitably on fundamentals, esp on financial news, takes time - ask any trader who trades on news and they’ll tell you that it is more like a case of wishing well, with a never ending appetite for the trader’s $$$$.
But all said, when the Fed announcement came out, it became obvious that $ was going to be bullish, short term. Good catch! But would advise caution when trading on just the basis of news alone…
Not all news is going to have the same effect on prices. The FOMC was a big news event, but that doesn’t necessarily mean that it will move the market. Just so happened that it did.
Many times, it is more about how the market reacts to the news than the news itself. Another example is NFP. Sometimes it can cause the markets to go nuts and sometimes there is not effect at all.
Like people have said above, it is a skill that needs to be mastered.
