I’ve never really thought about how to trade news releases until now, having noticed the large moved caused by US Consumer Confidence releases. I seems that prior to the release, price traded within a tight range as traders held out to see what would happen. Assuming this tends to be the case before all significant news releases, could you not just place entry orders above and below the range, so that you can be in on the move as soon as it happens? I suppose the danger here is that any market noise that could trigger an entry order prior to the release, would result in a significant loss if the market went the other way. Could this risk be minimised by using carefully placed stop losses, or using some sort of hedge?
I’m guessing that this is not a viable strategy, as it’s so simple that everyone would do it if it worked. Would there be a way to make this work? How else may one go about trading news releases?
There you go :>) I asked a trader friend of mine once about this and he told me, your new . . .spend your time learning what the long term traders do. Then he said 2 things you want to remember; first there’s nothing you can come up with that someone else before you didn’t already come up with and 2 concentrate on picking profit, not tops and bottoms.
@JRC, this is an old strategy that doesn’t work. I think its called straddling. The problem is with widening spreads and crazy whipsaws in the second right before very important news. It might still work for low importance news (but that usually moves a pair under 4 pips anyways). There are some straddling techniques that still work, but you have to know exactly which news events and which pairs to use. You will also need some automaton (there are EA’s and bots that can place the straddle orders 0.1ms before the release. Even those don’t enjoy high success because sometimes the spike moves in the wrong direction initially. If you really want to play the news, you have to study in depth all the historical charts and see what deviation causes what spike on which pair. A great place to do this is the analyze button on the forex razor calendar. (Real-Time Forex Economic Calendar | Forex Razor )
Every strategy is possible, but is it profitable. The danger when you straddle a trade is that economic news releases may trigger sharp price swings and you could see both triggered. Often price action moves one way and quickly reverses. You should focus on developing one strategy and perfect that. My personal view about news trading is that it is more guesswork as you never know what the report will look like until after the release.
good way to act upon on news release is to wait for some time see either market is moving accordingly or not , Just after news trading is very risky . Wait some time so that you may not face adverse situation . See charts of different timings to confirm trend.
I have noticed another aspect of the news events.
Watch at about an hour before it is time. See what the short term trend has been. And you should already know what the long term trend is. Then closing in…around the 30 min mark before time and shorter you will see things happening. I like to watch the 10 min charts at that time. You will definitely see the big players start moving one way or the other. And a lot of times they are right. NOT ALWAYS THOUGH. But they are getting a big jump on the move already. And if you have caught a trade going in the correct direction already (15 min or so till time) then you are in profit. And when it’s time…if you are on the losing side of it (news contrary to your direction) you can jump out. But, if you are on track, it is sweet.
I seen that scenario last friday with the EUR news. I seen them (big dogs) turning north, from going down, at 8 min before action. So, I got in, and was making profit up to the time. THEN IT WAS GOOD NEWS. I raked in 73 pips on that one.
Look…I understand that this is not always the case. But I do watch what happens at the news events for the GBP at 0930GMT. I does happen like this a lot. It is very risky, and I don’t always do that. But, it is very interesting to watch.
Ok. Another scenario happened this morning, with the GBP. It was 3 min before hand, they were rising. Then out came the good news. They rose up only like 40 pips, then dropped down, to the JPY though. And I wasn’t in on that. But, I like to watch.
Is interesting. For those who like to trade the news.
I am an avid newstrader, but I must say I never have been able to notice the big players make their move before a news release. In fact a lot of times price will be going in the other direction for an hour or so before a release, only to shoot in the other direction (just enough to come back to what it was an hour before the release). This makes it impossible even for the big boys to make money.
I suggest you wait for the release, and if the deviation is big enough open a position in the direction of the spike as soon as possible (every millisecond counts). If the deviation is very large, keep the position open for a long time, otherwise scalp it for a few minutes. I personally do it with a very high pip value, but I study the historical deviations and spikes and have my own set criteria, I can’t necessarily recommend that last part, but I have won very big because of it (and also had a few big losses, but as I fine tune my deviation trigger, I’m getting much better).