I’ve casually added a rule in my trading plan that if there are any high impact economic news events on the calendar that day for either side for a currency pair, then the trade can’t be taken.
Today I blase worked my way through my trades, scanned the last put the two trades one, then looked aghast at my decision. I’ve accidentally gone long EUR/GBP when in the next few hours, this is about to happen:
Am I foolish? How do you navigate this stuff? The trade is going nowhere for hours at the moment, I bet the market is waiting. Or maybe its just another sleepy Tokyo session. Do ya’ll also avoid medium impact events, or clustered medium events, or every event altogether? I know there might not be a silver bullet answer out there, but I would appreciate and experience and insight others might have.
I hope you left your long trade open, if you did, CONGRATULATIONS.
As long as you are not among the market makers I suggest you focus your trading on technical analysis. The fundamentals are not what they used to be with a lot of fake data flying around to wipe out little guys like me.
Simply follow your technical analysis, avoid harmonics. When the market trend is changing you will know and follow.
If you are a technical trader then forget the news. Only trade your rules. When you analyse your trading every week you’ll see if high impact news makes a difference to your profitability. If it does then stop trading then, otherwise just continue.
I hope you stayed with the short GBP trade today. GBP has been in a steep downtrend for many weeks now so the direction you selected was right. As for timing, I look to hold trend-following trades for a maximum of 5 days but of course as soon as I close one position I’m looking for an entry price at which to repeat it in the same trend. Bearing these points in mind, I ignore all calendared news events.
In any case, most bad news comes out of downtrends: most good news comes out of uptrends.
What timeframe are you trading? News items like trade balance and unemployment aren’t impactful on the daily timeframe. The main events to look for these days are central bank decisions, inflation figures and NFP.
I did yes! Thanks again for your insight. May I ask what kind of stop loss approach you use for these multi days trends initially? Its interesting that you ignore all calendared news events, it makes me think then that your SL is probably well out of the way most of the time.
Interesting thank you. I am trading on the daily timeframe. I’m trying to understand what you have said here. Is it fair to say that only certain very high impact events (the ones you mentioned, central bank decisions, inflation figures, and NFP) have the ability to change the direction of the trend, and everything else more or less retraces? Is that what you mean by something not being impactful on the daily timeframe- that it can’t reverse a trend?
Right now I’m usually using 1 x ATR20 to set stop-loss. If I wanted a longer-term position I’d push it out to 2 x ATR20 but in both cases the account capital risk stays at 1% or now (eventually I hope to push this to 2%). I’m also trailing the stops.
My manual exits would currently be at whichever comes first -
3rd consecutive higher daily close (in an uptrend) (and immediately set a new buy order at high of the day)
5th daily close with consecutive higher high (then set a new buy order at first lower daily high)
SL’s are essential. In trend-following they are just a chapter in the story, its neither good nor bad if they are triggered - when I’m stopped out of a trend its just another opportunity to get back in. Not having one will eventually be devastating for a trading account.
ATR is a measure of volatility so is just as rational as a resistance level or Fibonacci level etc. etc.
Central banks are the biggest players in the forex market. They provide the greatest impact since they have legal power to influence or intervene in the market. Most central banks are also mandated to maintain their currencies at a certain inflation rate. So everyone keeps an eye on them.
Things like GDP and unemployment are secondary. They can help predict what a central bank may do in the future, but it’s nowhere near as influential as inflation rate figures. And the inflation rate directly influences a central bank’s decision to raise or slash interest rates. So on a chart, a news release like trade balance probably won’t reverse a trend. From my experience, “medium-impact” news may change price by 10-20 pips.
I have raised this question on my mind over the past few weeks. The news is not what it used to be. Some critical news that is expected to move the market might not even be significant after all. I built a whole strategy on economic calendar (news activities), but it is bullshit now. Just a lot of fake news flying around.
We try not to trade during the news like NFP, Durable Goods, Interest rate decisions, etc. If we have any open positions, we close them. As such trading is a flip of a coin.
Haha thank you. You know what, I actually did read all that in babypips school now you mention it. I thought what the f%$& is all this. I scored low on recognising the crab and the butterfly and all the rest of it. I’m glad you think its bs. I did too.
