Can I trade economic news after the news or before the news with the aid of sentiment analysis
Its very difficult to correctly enter the market before news and make a consistent profit.
The market participants who move prices are the biog banks. They have the best brains, the best computers, the best data and the longest price data records, the fastest newsfeeds. So if anyone was certain before the news which way price would move it would be them. And so they would put money in and we would see it as price reacted accordingly.
Sometimes you actually can see it - price runs up and up towards the date of a news announcement due to the big banks taking positions. But right after the news they exit and bank their profits and we’re left holding the baby.
As for sentiment indicators, they’re constructed from the trading choices of private retail traders, who are usually making a loss, so beware.
So what do u suggest to follow the sentiment analysis or sentiment indicator because I look more on the sentiment but I want to be sure if I can go with it during the economic news
You could wait until after the news and then follow price.
Its also possible to place bracket orders above and below price ahead of a news event. That way, if price rises your buy is triggered and if it falls your sell is triggered. This works better in theory than in practice. In practice, the big banks often close or reverse positions as soon as they can after news. You also need to contend with the wider brokers’s spreads around news events: this can be 10 or more x the “normal” spread.
And of course, using bracket trades means you could potentially have two stop-losses hit on the same market on the “same” trade if it all goes wrong.
Thank you very much
Without a live news service your best to have no position at least 5 minutes before high impact news data. Then if the move on the release of the data is very aggressive place an order behind the move 15 pips from the price before release and hope for a pull back. Otherwise if you want to trade live and catch the move at the beginning you must have live news data so you know what direction to trade.
which live news source would you recommend?
I personally use MetaStock Xenith which is a professional news service including news and data from Reuters. It costs me about $100 US per month. I feel it is a good investment since it’s very comparable to the professional Bloomberg Terminal and it is recommended by my trading teacher who used the product in Banks he used to trade for.