Trading the news

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24

I have three years professional experience in this industry, in addition i benefit from having colleagues with over 15 years screen trading experience and others with even more trading on the floor. The strategy you describe is strictly forbidden here. The scenario i described in my previous post is not the worst case scenario, in fact its the best ‘bad’ outcome. The real danger comes from slippage.

If a number is way outside the analysts range and the market blips 100 pips(for example), your stop entry maybe be filled last i.e. your buying the high or selling the low. Which depending on how far the market blips can be very expensive. A combination of the 2 scenarios could happen, which could wipe you out.

You have to think, if it was that easy why doesn’t everybody do it, because i can assure you its not done.

If your making money i guess thats all that matters. What platform are you using ?

25

Kagein
’If a number is way outside the analysts range and the market blips 100 pips(for example), your stop entry maybe be filled last i.e. your buying the high or selling the low. Which depending on how far the market blips can be very expensive. A combination of the 2 scenarios could happen, which could wipe you out.’

I have experienced getting clobbered by those sharp moves and high spreads… those have discouraged me from learning about news trading.

I don’t know what approach you may use or what others around you may use, but waiting until the volatility calms seems to me the approach to use.

26

I am using metatrader 4 for trading the news.The slippage is no more than 2-3 pips and why are you ignoring the positive side that market always moves in the one direction right after the release of the news instead of giving whipsaws.It depends upon your experience which tells that which one of the news are the biggest market movers and which ones are not?
For example,if Australian jobs data is gonna be released.The forecast is that only 7000 jobs were added in the last month.When the news is released,we see that in the past month 30,000 jobs were added in the past month.Won’t u expect a tall Bullish marubozu candlestick after that release and here the pending order will do the work and earn profits for you.

27

Everybody has his personal point of view.The widening spreads don’t hurt me because after the release of the news market moves sharply moves in one direction in case of any surprises to at least 40 pips so collecting some quick pips doesn’t hurt my trading personality.Also,i am not saying that you’ll always earn profits at the times of news but in the long run you’ll be profitable.

28

Trading news releases is quite difficult and to be anywhere near effective you have to have a fast execution platform and direct market access and it costs money. The platform i use i costs between £800-1000 per person (i think, not sure). So really if your trading with metatrader or using the brokers platform, your not going to be fast enough. Even with the platform we use, computers are still going to win. Thats why i would only trade way outside the range, i.e a surprise

Giving all this the odds are stacked against you, thats why ive moved this thread away from trading numbers to trading comments and statements. The odds are stacked more in your favour because unless its a pre-prepared statement, computers dont play a factor.

29

What fx broker do you use and what are your favourite numbers?

31

You are right,whichever platform you use,the computers will always be faster than you.So getting late in trading the news may cause a heavy loss.

32

My opinion, I like FXCM. I don’t trade the news.

33

What is their spread during times of news?Do they have any slippage etc?

36

I don’t know if you guys gonna disagree with me on this, heres my take :

News is subjective, not objective. Trying to achieve an objective analysis on something with a subjective nature is hard :

-News exists all the time. I suppose what you guys are trying to do is to look for high impact news. If you think about it, there is no such thing as ‘high impact news’. But of course, one can statistically and via experience + judgment determine which are the important ones. The chart itself already determines future price (beliefs of the participants), so trying to anticipate news is like trying to anticipate an event that is already anticipated. Why not just take things as it is?

-Take the anticipating issue one more step further; if new exists all the time and everyone else seems to be attempting to anticipate it, this means everyone’s timing of entry will be different. Everyone’s direction of entry will be different. This is due to conflicting beliefs between the participants. So who can be correct? But there must be winners and losers. Losers pay the winners. If so, its easier to determine the losers than to determine the winner. Find where the loser’s money is and take it.

-One can use frequency distributions / standard deviations / volatility statistics based off historical outcomes. See how Henry Liu does it. Forex News Trading - Henry Liu Forex. One can also do a simple study just using tick volume on a H1 chart + forexfactory news calendar indicator.

-Look to trade the reaction, not the action. News attracts the public / the prey / losers / 95% of traders. Professionals / 5% / winners often trade the other side to eat up the prey. Watch how volume forms when major news is released, then watch how price is related to the volume. Think where the major stop clusters are going to be placed (major extremes, rounded numbers, recent extremes…etc) , wait for the ‘whip’, then trade the other direction. There is no other way for big players to make money other than this.

-News often distorts ‘supply and demand’ / balanced markets / ranging bound markets. Thats why conventional indicators cannot determine news flow / direction. One must invent ‘unconventional indicators’ to do so OR think differently from the crowd. Price movement via news do actually line up totally with TA, only if one uses it correctly.

-One needs to consider money flow of the particular currency in question. In reality FX pairs don’t really exist (check history of currencies and you will see what I mean). e.g. If the news is GBP related, one must see GBPxxx movements and then pick the best currency on the other side to catch the movements. Knowing money flow also helps the trader a lot, to avoid being whipsawed too much, since he can better see and understand the true source that is making price whip.

38

Yes agreed, and I found it very interesting to watch the Non Farm New traded this morning. Price still held up on major support and resistance levels, it was just more sped up in momentum. My theory is that an increase in speed always eats up the beginning traders as they fear quick volatile movements, as they see no end to the move, where an experienced trader knows when the price will stop and turn around.

39

See 301 Moved Permanently

Start from #1070. Lets compare charts? I would love to see what you see, especially your definition of ‘major support and resistance levels’

41

I have to apologise i promised to run through the ECB conference before so you know what to trade and how but because it was a pretty big one i had to really prepare myself, in addition i havent had time to post stuff because i just moved house and theres a ton of things to un pack… Anyway i’ll get back to it.

42

There are many ways to trade the news releases, not to mention the “by rumors and sell facts” traders.
Here is my own news trading plan. Since I can’t afford Kagein’s lightning speed equipment, I wait for the news to come out. I don’t worry about the initial direction and don’t even look at the actual numbers. After 30 minutes draw the highs and lows attained and enter at whichever is broken first. This way not only are you with the trend but you can hold it for days and even more if lucky enough to catch a turning point.
I really believe that people need some time to go over the release before deciding which way to go.