I’m currently practicing on a demo account and have been mildly profitable until these last couple of weeks, which were very turbulent. It makes me wonder how sometimes “childish” reasons (like a tweet) can move currency so much. My analysis which works just fine in normal times is wrong every time. I had a loss streak.
I want to see how you approach situations like this:
Do you trade the news and if so how do you do it?
Or do you whatch from the sidelines / trade less volatile crosses?
What I do most of the times are two things on the go. First, I follow accurate news portals like fxstreet to determine what has just happened to a pair or if any changes in the fundamentals surrounding it. Then I use forexfactory economic calendar to determine upcoming news with high impact and time. Once I understand the impact that news will have on the related currency, I make plans to place trades once the event takes place. The news will sometimes move the market from 20 to 100 pips.
i do my analysis, check the news for the day, and if possible use them as catalyst for my bias. meaning i wait for the news to be over and look to see if they confirm my bias or not(i do not trade during news, especially nonfarm, cpi, gdp, minutes). often news are manipulated, meaning they break into a direction, just to fool traders and trap them, ending up going the other way(fake breaks, very high probability trades). however u trade, i d say to let the news pass, and if u are in a trade before the news, lock BE or if not possible just close it(mostly for high impact).
cheers
Like many here, my trades are long term, so for me there’s no avoiding news events. For the most part these spikes are just reactions and temporary. TA shows where long term S/R levels are so once those levels have been determined then price is eventually going to get there. Just make sure your stops are well out of the noise.
I don’t trade the news - if there is big news expected I stay away from scalping that currency. If big news has come out unexpectedly, it will often create a much taller candle than usual on the short time-frames and this pushes my logical stop-loss positions much further away than is usual, which reduces the pounds per pip and makes a decent profit as a function of the longer candle less probable.
Big news also widens spreads to figures that can’t be predicted and without notice, as well as often generating comparatively huge volatility so that stops on short time-frame trades are likely to be hit even if you get the price move’s direction right.
Tweets or other seemingly innocuousness news events that move price are very often predictable.
Sometimes price turning news takes 2 days - the first day is the actual news and the market reaction - the ‘knee jerk’.
Next day the market will take stock, then either the knee jerk will continue - i.e. it’s not a rumour - or the news event becomes discounted, usually by a denial or proof of mere rumour.
The market then reacts the second day, and if traders missed out first day then this next phase is a good bet.
The bad news is that you have to get to understand current affairs and then you have to almost think in the right side of the chart.
One example that springs to mind - the murder of Jamal Khashoggi in the Saudi embassy this time last year - then in early Nov Pres Trump was in Europe for the ww11 commemorations.
He was headed home in Air Force 1 - tired and having a snooze - some guys were grumbling because they thought he left early.
Over the previous couple of weeks he had said little re the murder, a little like between a rock and hard place, Saudi is an ally but what happened was sickening.
So there came a tweet on oil prices shortly after AF1 landed…
That conversation is what i mean by understanding news and price.
(btw oil prices continued south and hit a low at the end of Dec 2018)
Edit: check back oil on Nov 12 and next day Nov 13 - knee jerk and and continuation.
That example was just one that sprung to mind maybe because twitter was involved, but it’s a year old and thus old news.
How about today - cable and news.
I’m not going into all the stuff, @Falstaff has an active thread worth reading, suffice to say see this past 2 days chart - there were guys who sold last night’s high thinking that GBP was somehow overbought - likely some indicator.
Then there were others who waited for a childish tweet second day - it came - at the same hour as the arrowed hammer.
That wick - it’s bottom, last week’s high - look again at the tweet, it has two parts, first a negative - price went down, then a positive (the denial or proof of rumour) which was in line with yesterday’s positive news, so price continued up
Apologies for length of post - sometimes not easy to put into words
Finally - to the right side - that’s where to learn.
It’s a weekend, there has been a 2 day push up on GBP - most likely all TA indicators are screaming overbought.
Time to step back and think about ‘childish’ tweets and leaks etc.
On GBP side leaks have been controlled, they only have to come from one side, and most recently when unauthorized people were fired.
Therefore UK leaks have a purpose - being controlled they have less impact.
EU leaks are different - there are 27 countries, many more ‘sources’ for journalists - so check both sides Sat and Sun - then Monday the Asian traders will respond first, see how they react - there is a huge pressure to sell GBP based on the rise - the wise will hold fire and wait on the news.
Now you see that depends on the timeframe you are looking at as well. what seems to be a big move on the 5 minute or 1 hour - even on the daily, when You look at the bigger picture, often seems to be a perfectly normal movement which fits in well to the overall “up and Down” motion of the pair in a quite normal way.
That GBP/Usd chart @peterma shows above, with the “tweet” marked on it came 1 day after we got a “hint” from VARADKAR that a “treaty” could be possible.
BIG STUFF indeed on the smaler timeframes and here on the daily, it was significant
Even so you can see that the level was very low and a rise should not be very surprising, even though the pip values were exceptionally good !
But when you go to the monthly,
It is apparent that the gbp was at a very low level and a Support/resistance trader for example would not be surprised at all to see the movement. In fact, he may see it as just the start of a potentially useful move.
So in precis then - News is not easy to trade - often the movement is in the WRONG direction ! and sometimes apparently big news and it doesn’t move at all. However some people DO trade the news and if you want to , then I suggest you open another demo and just use that one for “News” - so as to keep your records straight for your normal system. News trading can be quite fun - but start small !
For me as a daytrader/scalper with a technical approach its important to write down the times when most important news of the day are published. Some minutes before and after i avoid entering any trades. Sometimes i gamble and trade on the news release or jump on the train after the release to make some pips during the roller-coaster, but that has nothing to do with trading…
So that is something you can plan- scheduled news release. But what is realy dangerous is the fact (and what you realized very well), that ridiculous tweets or interviews of not ridiculous persons drive the price immediately, mostly against your actual position, sometimes you profit from them. Unfortunately nobody can foresee that.
For that situation i found (for me) the best solution: stay as short as possible in your position, so you won’t get surprised by such incidents.
Like many people already posted I do not base my trades on some news going on really. I do something more which is not related with them like long term trading and this one doesn’t really hurt you all together. And I am also not on demo account anyway.
And yes It’s the news that’s NOT on the economic calendar that freaks me out. By the time I start trading for real Brexit would be probably effective as for the US China problem that’s still blurry.
@peterma I guess you’re right about understanding the situation. I hate watching the news but I’ve come to believe it’s necessary to gauge how to trade. Also no one minds the length of the post when it’s informative.
@Falstaff I mostly day trade and so far haven’t left a trade open for more than two weeks (don’t have the patience and gut for that kind of trading). So my stops were hit. Also I’d rather be broke with my bones intact.
You all seem to like my “childhish” adjective. Actually I was talking about this tweet specifically
Aye, that’s understandable, likely you are a younger person.
Many, many years ago I worked in a sawmill - I was young. i had to pass my grandmother’s house early in the morning going to work - she would never stop me to chat - being early was important.
On the way home was different, the dog could sense me a long way off, no way could i sneak past, the griddle was hot on the open fire, bread was cooking, I had to go in and tell her all the day’s craic (chat).
Thing was there was no TV, no electricity, a small ‘wireless’ in a little cave in the wall powered by a battery - the chat would come to a brief halt at 6.00pm.
The wireless was turned on, it would sound 6 beeps - it was news time - we would fall silent.
An old story, but when you get to live current affairs then ‘news’ and the market become a love, not a hate
Example for unexpected news today and the consequences:
Today i did not trade because i had some money left, but in the afternoon i took a short glance on my mobile on the markets. EUR/USD up-moove at 16:27 hrs jumped immediately into my eyes.
Normaly such sudden price mooves are news- driven, so i was curious what happened that time and checked news pages.
![Screenshot_20191015-184254|281x500]
(upload://jGot7T0FgJvTdJ5e0JvX5dNsRDl.png)
You see no scheduled news at that point of time, so i suppose maybe:
1.FOMC member mentioned something
2.Release of very bad U.S. company earnings
3.Sudden message to new China trade war drawdowns
4.Anything else not scheduled but good for EUR and bad for Greenback
I had time to check out the reason- in the same minute 17:27 GBP/USD and EUR/USD shot up, so it is clear that the only reason can be one of these positiv brexit news.
Brexit negotiations now present an extreme high risk situation for GBP trades. Ordinarily, good news emerges during uptrends, in a series of anticipated positive events (vice versa for bad news in downtrends). Its fine to join such a trend once its established and running consistently.
But higher price doesn’t automatically make an uptrend. If price rockets within minutes following some tweet by a journalist, it can fall just as hard and just as fast. Don’t get sucked into chasing price.
