How should a swing trader approach trading the Forex market on 4-hour or daily timeframes when there is a high frequency of impactful news events, such as during the first week of each month when major economic indicators are released? For example looking this month first 2 weeks are full of economic news events, NFP, Fed, CPI, PPI (US)
When swing trading the Forex market on 4-hour or daily timeframes, traders often debate whether to consider or ignore upcoming high-impact news events, such as Non-Farm Payroll (NFP) releases. Many trading strategies suggest waiting to enter trades until after major news events have passed, to avoid the increased volatility surrounding such announcements.
However, in periods like the first week of each month when there is a high frequency of significant economic data releases, it may not be practical to completely avoid trading during these times. The question then becomes - how should a swing trader handle this situation? Should they still enter trades based on their technical setups, even with news events looming, perhaps using wider stop losses? Or should they avoid taking new positions and wait for a calmer market environment? What are the tradeoffs and best practices for managing trades around periods of heightened market activity due to scheduled news releases?
Ultimately, the goal is to understand how to effectively trade the Forex market on medium-term timeframes, like the 4-hour and daily charts, while navigating the challenges posed by a busy economic calendar full of high-impact announcements. Detailed insights on strategies, risk management, and overall approach would be very helpful for swing traders in this situation.
I think there is not enough info (topics) talking about this subject, or maybe I haven’t find them yet…
They should do whichever one gives better overall results, in accordance with their own risk management parameters, when they test both including and excluding major news announcements, surely?
There’s no reason to imagine the answer’s going to be the same for everyone?
It will depend both on what they’re doing, and their own risk management preferences?
This is a genuine problem for private retail traders.
Back to basic principles from recent examples -
EUR/CHF - The collapse in this pair’s price was the largest single-day forex price move ever seen by most of us. But the pair had been in a downtrend for months. Nobody had a good reason for being long.
75% of the worst single-day price falls in the Dow in recent history occurred in established downtrends.
You are not going to like this answer because it will require quite a bit of study and effort, but…
The right way is to understand the news.
You can’t ignore them, and especially if you are a swing trader you can’t just close your trades at every single news event.
You are going to stack up quite a bit of spread costs and also you are going to miss many moves that have news as catalysts to push prices in your expected direction.
So, again…
The key is to have a basic understanding of what’s going on fundamentally with the news.
Babypips has a great section in its academy for that which covers many important basics you need to know to understand what means what, what is what, and so on.
So start there.
And if you have any specific questions along the way feel free to ask with a new thread on the subjects that you can’t understand or make sense of.
Also…
This is absolutely true!
But there are a few good resources here in this forum that you can follow.
Like this thread:
The rest of the useful information is spread around other threads and answers.
Successfully navigating swing trading during periods of high-impact news events requires a well-defined trading strategy, awareness of economic events, and adaptability. Monitoring the economic calendar, adjusting stop losses, reducing position sizes, and waiting for market confirmation can help mitigate risks associated with increased volatility. Maintaining discipline, setting realistic expectations, and refining strategies are key to effectively managing trades during periods of heightened market activity.
You raise some excellent points about the importance of understanding the fundamental aspect of trading. I think you’re right that it’s important to balance fundamental research with a close reading of what the market is actually telling us through price movements and trends. Having a holistic view that incorporates both aspects can provide a more well-rounded perspective for making trading decisions.
However things like NFP, Fed policy, inflation numbers - they all have the potential to move the markets, but the market’s reaction isn’t always straightforward.
Sometimes the market may not accurately reflect the underlying economic conditions, especially when there are concerns about data integrity or other potential distortions. In those cases, focusing more on the technical price action and market signals can, for me, be a prudent approach.
Thank you for sharing your insightful thoughts on this. Discussing these nuances around technical versus fundamental analysis is invaluable for enhancing one’s trading approach. I appreciate you taking the time to provide this thoughtful feedback - it will help me have even more meaningful dialogues on topics like this going forward.
