So, I’ve noticed quite often the price moves a bit in the direction that the news items move the price before the news actually is announced, so I wonder if the news is leaked or if some people have insider information and this can be used to predict moves based on news?
Also I notice that quite often the price moves back to roughly where it was before the news, so some news is only very short term in its effect on the price, sometimes it’s long lived, are there different types of news that affect the price differently and can that be used for trading?
Those are illiquid times in the market, very wide spreads. You’ll pay more to transact than the profit target. Historical price charts don’t show spreads. Trading during risk events will always have retail traders at a large disadvantage.
I don’t believe any retail trader does, in the long run. Not at all.
People say they do (on Youtube, etc.) but it turns out that their income’s really from marketing on Youtube etc., not from trading. As so often!
Read every sentence of Ryan’s post just above, David - it tells you what you need to know!
Regulators and big prop-firms always say that retail traders trying to trade the news is the commonest cause of account-loss.
It’s basically trading without a stop-loss (because “news” is the one time that your broker can’t honour your stop-loss, and it says somewhere in their small-print that they might not, but nobody reads it all!).
People think they can do it, and say so on forums. Everything goes nicely for them the first four, five, six times they try. Then BANG - the seventh time; margin call, no funds, out of business.
Yes, but the main point to appreciate is that you can get the overall direction right 80% of the time and stll lose money (from spikes in both directions) overall. It’s very deceptive!
I think the price moves before the news because traders try to predict what will happen. After the news comes out, the price sometimes moves back because the market overreacts at first and then correct itself. Trading news can be risky, so I usually wait a little after the news to see how the price behaves before making a trade
If you watch how most of the high impact news affects the market, you’ll typically see a spike on release, a sharp retracement that sometimes goes all the way back to where it started, then the real move which is often in the direction of the spike.
It depends on what news event it was and how unexpected it was. News is difficult to trade, but if I was inclined to trade it, I’d be taking the 3rd part of that move and if you got a non retracement day ignore it.
Most news is priced into the move months, weeks and even years before the actual event.
That said economic trends and corporate trends are often not well priced in and that’s because it takes time to analyze economic data impacts. Also some markets are less sensitive to economic events. Gold for example only factors in inflation and systemic risks, the stock market factors in inflation and specific inflation linked events, etc.
In Forex insider trading is legal, so depending on who you know, you may well have insider information. Hard to say but specific news item trading is useless beyond volatility strategies. In the CFD world spreads will take away the reliability on any such strategy that relies on individual news points.
Secondly, news media receives their information from a source. So any news you hear is already known beforehand. It makes no sense to even consider news beyond keeping yourself out of the market when major data points are being released. A swing trader probably will not even factor news into their trading at all.
Hope this helps. PS: There is such a thing as event driven strategies in the institutional world but most retail traders don’t do this and it is even questionable if the institutional traders even make any money doing this.
you’re right to notice that prices sometimes move just before news is officially released and it’s often because some traders might have early access or are acting on strong predictions which isn’t always fair but it does happen this can actually be used as a strategy by watching how the market behaves right before scheduled news drops also not all news has the same impact some events like interest rate decisions or major company earnings can drive prices for days or weeks while other news just causes a quick reaction before things settle back to normal learning to tell the difference is key to trading news effectively platforms like hfm make it easier by giving access to fast news updates and trading tools that help you act quickly when it counts
During the binary options days, I have seen plenty entering during massive news events. They enter a buy or sell & if the price moves in favor they enter opposite thus giving themselves a chance of winning both if price ends in between or losing very less if it ends elsewhere n we all know binary traders don’t need to bother about stop-losses or magin-calls
Yeah, prices often move right before news comes out, could be early positioning, algorithms, or just market sentiment. I’ve learned that trading during the news itself is usually too risky. Spreads get bigger, slippage happens, and stop-losses can get hit easily.
But watching how the price reacts after the news is helpful. A lot of times, there’s a quick spike, then a pullback, and then the real move starts. I focus more on that follow-through than the wild first reaction.
Also, when prices move before news, it often shows what traders are expecting, not always insider info, but still important to notice.
I sometimes find that trying to “look at it from someone else’s perspective” can broaden my outlook and help to crystallize my thoughts on subjects like this.
The question I ask myself, in this specific context, is whether - if I were lending a friend money to use as trading capital - I would want them “trading the news”.
And for me, that kind of clarifies and resolves the issue.
hello
I’d like to know how news can impact on EA trading
I’m going to try a free EA with good reviews
usd eur
*I’m beginner… so would like to know your opinion
thanks!
News events can move markets fast, but trading them is risky for beginners. Prices often react before the news is released due to the actions of big players and algorithms. When the news breaks, spreads widen, slippage occurs, and stop-losses may fail.
Instead of jumping in, observe how the market reacts after the news. Often, there’s a spike, a pullback, then a clearer trend. That’s a safer moment to learn from.
Not so sure re an AI but it’s good to see & learn re news right now & it’s effect on price.
Example - GMT+1 US jobless rose by 14k to 240k in the week ending May 24
That’s 10k more than expected - so if you look at Eur/Usd 1/2 hr chart you’d say - ah big candle, too late.
But look at 5 min - after the release big candle up sure, but then rose steadily, plenty of time for say a 20 pip gain - now the move has settled, so no chasing.
Back yesterday decided to do a little test re news etc.
I don’t trade Eur/Usd - (EG is my thing) but since i quoted price on that instrument so used a demo to make my point.
Difficult to see now next day on a 5 min so out to a 15 min.
Some years back a fx commentator equalled movement of price like an old guy getting of the bath - he gets the news - time to get out, jumps with a start but not so easy, he slips back in, after a bit of efforts he gets out.
News can be like that - price jumps - key here is to think of the orders that didn’t get filled bcos price gapped thru - what happens to those orders?
If the Fundies have not changed then they stay - price makes it’s way back to where orders are.
Long story short that’s where the notion of a 50% fib comes into play - guys set/re-set the orders at the half way mark.
Yesterday when i posted I set a ;limit at the 50% and see what happened - they beat me to it
