News releases

Hi guys,

Im about to start forward testing my first system. Its a MA breakout system that takes typically 20-60 pips out of the market with trades running anything from 30 mins to 4 hrs. Its backtested OK - about a 70% win rate r/r 1:1.

Im worried about news releases though. Obiously, - only looking to take 20-60pips out of the market i cant afford the widening spreads that will occour in thin liquidity conditions.

The system trades EUR/USD. How can I know which new releases will effect liqidity and to what degree? I’d be looking to trade the london market - and looking at it lists like 10 relevent releases a day. If I avoid them all I’d never trade at all!!!

Did your backtesting take any news releases into account?

No :frowning:

Thats the primary reason I need to know how to objectivly asses news releases - so that I can pull a historical record or relevent releases and have some idea of which trades I need to wipe from the backtest…

I can relate due to doing my own backtesting and not knowing what news was released when either. However, many releases are scheduled on a regular basis throughout the year so you could check the dates of your trades and figure out if it was the 2nd or 3rd friday of the month/qty/year when such-n-such figures are usually released, kinda thing. The economic calendar here on BP may be a good source for that, and it will tell you if they’re low, medium or high impact too.

Even so, sometimes a news release that had a big reaction in the past, may not have the same reaction in the future and you have to consider the reactions to the forecasted as well as actual numbers. Also, a past reaction that may have been in favor with your system, may not in the future. I think it would be hard to objectively assess them for future consideration, but good luck with that…:smiley:

Thanks SweetPip. Yea, I had the same concern about news having a posative impact on my system in babcktesting - especially seeing as its based on short term moving average cossovers…

I guess the only way is foward test with a micro acc get a feel for it - which was my plan anyway…

In terms of the impact rating by the news scedules on the BP ecenomic callender does anyone have any ideas of what impact ratings i should stay clear of (will seriously reduce liquidity and widen spreads)? Obiously, ill give the high impact rated releases a wide birth, but do you guys thing i should avoid holding trades through the medium impact rated releases as well or am i being over cautiose…? I guess Ill have to hold through the low impact releases as otherwise I’d never trade at all!!!

based on my experience trading the London session, I’d stay clear of

[B]United Kingdom[/B]
[li]retail sales
[/li][li]inflation hearings
[/li][li]interest rate decision

[B]Euro zone[/B]
[li]ZEW reports
[/li][li]GFK reports

There are other reports but based on my experience, these are the reports where I’ve seen the most movement during the early European session.

Btw, if I understand the previous posts correctly, when you did your backtesting, it DID NOT take into account news events? Does this mean you backtested it, regardless if news came out so? If so, wouldn’t 70% profitability be alright? Also, are you using an EA or you will be manually taking the trades?

Thanks monstapips - allthough its EUR/USD ill be trading not cable. The system requires me to take trades manualy.

The proble with not including the news releases in backtesting is only partially that it may or may not have moved the market in the direction of my trades. The primary problem is that the backtesting will have included trades that i would have been forced not to take, or to close early, or even worse, have been whipssawed out of due to increased spreads hitting my SL…

In that case, I think the only think you can do is to manually backtest and check if there were any news reports on those days that you would have triggered. that would be a real pain though. haha