Newbies Guide To Becoming A Forex Trader

hi eddieb, just another question about the news. if we have an open trade and a high or medium event that relevant to the pairs will release in 30 minutes, what is the wise thing to do? close the trade?

Hi,

Even I don’t understand why should one not trade a event or news. I think most traders do trade events.

Hi caharsh

i am a newbie but I will try to answer your question. this is what I know n what I believe it is true, before the result release many big traders and bank already know the result and make some trade hence the price already move before the result release.

If you trade the news you need a very good strategy because you can get whipsaws that trigger both buy and sell orders , so what news tradera do is they trade the fade, e g. they wait for two to four 5m candles after the news and then go in… Trying to jump in on the very moment a news item of importance comes out is like playing Russian roulette with your money.

If the trade ia losing money but you think it may reverse in your favour then watch the trade during the news and close it manually if thinga appear to be worsening …or, hedge the trade by opening one in the opposite direction…or, put in a stop loss. Or, close part of your trade…

hi pipmehappy
sound a bit advance for me, but I get what you mean.
thanks

Hi Pipmehappy,

Agreed, there has to be a strategy in place. I have a very good record trading the events, not so good with technical setups.

Hi Ray. You don’t have to do anything. If you believe that, once the whipsaws have ended, the pair you’re trading will return to the path they were on pre-news you can just wait. However, if in doubt you are safest to close the trade. There’s a lot to be said for playing it safe

Hi Caharsh.
Most traders will trade during the low impact events and some of the medium impact events. What I’m really advocating is to be extremely careful around the high impact events, events where price can swing 100’s of pips one way then the other.
It only takes a trader to get caught once to wipe out his account, and most new traders dont have large enough accounts to survive these.

thanks for helping

well done, good thread indeed. keep it up… :slight_smile: (y)

This chart, from the “Trading the News” section of the Babypips school, shows the average pip movements for some of the major news releases. Obviously there figures can vary, so be careful. If you’re trading EurUsd and risking $10 a pip, a 150 pip move against you is going to cost you $1500.


You may also find that during news brokers widen their spreads, so you cost of entering trades is more. Also, due to high volatility your broker may not be able to close your trade at your desired price. This is a surprisingly common occurrence called slippage.

Thanks again, good source

Kind of feeling de-motivated. These risks I know, I have been through the school twice. But I think I ll continue trading events since that what has given me best results.

Well, if you are a newbie, better start on lower amount for you to just try if your strategy would work for profitable trading.

You should read this thread:

http://forums.babypips.com/forextown/79264-6-losses-row-feeling-super-demotivated.html

I have read that thread the ECB rate decision they are talking i did very well in that. I gained +** pips when EURO went down, then again when draghi said no more cuts i gained +*** pips. I have a partner and we made some money in Gold that day. I am not saying i always win , i have been on the losing side while trading events but my journal says my winning pips are way more than pips lost while trading events.

This should be an integral part of your trading plan but, just in case you omitted this from yours, here are some points to consider.

[U]Be realistic[/U]
Partly encouraged by brokers or people selling trading courses, many newcomers enter forex trading with vastly over optimistic expectations. There are dozens of threads on here started by traders asking if they can make 25/50/100% return on their accounts per month. While its not impossible, its so difficult to achieve on a regular basis that setting targets like this is only likely to encourage traders to take unnecessary risks, and it only takes 1 big loss to blow your account. Remember, you’re still learning, it’s more important to still be trading tomorrow than to try and hit a made-up target today.

[U]Look at the big picture by thinking small[/U]
Lets say you have decided that a target of 100% per annum growth is achievable. That’s 8% per month, 2% per week, less than half a percent each trading day. How much of your trading account do you want to risk to hit this 2% a week target? I know one full time, successful trader, who risks 10% of his account per week to do this, split into 5 daily risks of 2%. He starts out on Monday placing his trades. If he hits more profit than his target, he then reduces his risk the following day. He doesn’t increase his risk if he falls short of his target, that’s just asking to lose money quicker. As he tells me, if he’s only looking for 2% growth a week, psychologically there is very little pressure to do this, so shortfalls can be brushed off. On the other hand, one good week can surpass a whole months target, which means 3 weeks of stress-free trading lies ahead.

Nice Thread I didn’t see it before.

The last advice is good for me. After winning 2% to 3% a week for a few weeks I loose 5% in the next week and I can start all over again. A limit for the week will do it. Just stop trading and not have only a risk on the trade but also a daily and weekly risk target.

Thanks!

Some of you may have noticed I have a tendency to ramble on a bit. If you would like anything breaking down into smaller pieces just let me know, especially if English isn’t your first language. :slight_smile: