Hi all… I have been demo trading Forex (EUR/USD) but am now looking deeper at news/events and wonder if it is better to trade non Forex markets for specific countries news.
For example, on the EUR/USD, I am watching all EU & US News/Events from economic calendars, but as well as ‘Eu’ or ‘US’ events, there are also country specific events on the calendar for each European country… i.e. German,French,British etc.
E.G. German CPI figures… will the release of this type of event cause a greater move on the Forex, or a different market.?
I don’t even know what type of markets to look at as I am such a newbie… I believe the Dax 30 is the German stock market…?
In general, which EU specific countries have their own type stock markets or other type markets where news/events have a potential for a greater price move than just on Forxex EUR/USD…? sometimes these country specific events have no impact on the EUR/USD and I wondered if they had a greater impact on a different market?
Have a look at the economic calendar on dailyfx.com. Tells you what’s coming up in scheduled announcements, how important it is, what it is, why it will be so important, which currencies it will affect, consensus forecasts of what it will say etc. etc.
Trading scheduled and unscheduled news events intra-day is possible but fiendishly complicated and difficult. Don’t assume you can have certain “edges” over what the big market players do - you can’t get news they don’t have already, you can’t analyse it better or faster. Don’t think that they have overlooked something you have seen and it will be just a matter of time until they realise…
I trade the news especially the retracements.
I use the Forex Calendar @ Forex Factory with on the reds and oranges and the news items that mainly affect the forex pair. I also try and keep up with the overall news bias.
I also keep an eye on https://www.forexlive.com/, I review both before I start trading and leave them running.
I trade mainly the majors. When going ahead of the news I use stop orders but that is still too much risk unless I darn sure (LOL) which way the bias will go. Otherwise, I just wait for a retracement and will trade it.
That said if its an orange news or a piece of news with a low volatility history I may gamble on the bias with correlated and uncorrelated pairs ergo a basket of 2-4 pairs to enhance the profits.
Thanks for the reply… I do watch Economic Calendars … 3 of them so I can cross reference as they differ (wildly) in consensus as to whether events are High/Medium/Low impact.
I checked your DailyFX link, it looks like it does the same as the others I watch… but on none of them can I see where an economic event is suggested as having an effect on a specific or higher effect on various market types that can be traded.
For example… this Monday 21st Januray there is the monthly German PPI figure coming out for the month of December which is rated as having a medium impact… there’s a good chance that will have little effect on the € Euro in relation to the EUR/USD or any other currency pair that the Euro works with, even if it was rated as high impact.
My question in part was is there a non Currency market that such European country specific events do have a more regular/higher impact on?
As I mentioned, I am such a newbie and only starting to get my head around Forex, I hear of people talk about the ‘Dax’ which I assumed was the German stock market of some type… I literally don’t know other markets types and names other than Forex.
Would ‘German’ economic data be more likely to have a higher effect on something like the DAX or any other type of German specific Market other than Forex?.. If so, where can I find out this info as to what other markets I should be looking at for Germany,France,Great Britain & Italy etc?
Yes, I have experienced that trading events is tricky, and obviously I don’t have an edge over the market makers in relation to understanding or pre-empting the data etc, I think I’ve got a bit of a sneaky edge in relation to how I am using my particular trading platform that I am experimenting with
It seems odd to repeatedly get specific EU countries data (i.e German) when it is ‘High’ impact and it has absolutely zero impact on the Currency markets time and time again. It seems a waste to look at this data in relation to Forex and wondered if there was a different market that it might have more impact on ?
Thanks for the reply… I do watch Economic Calendars … 3 of them so I can cross reference as they differ (wildly) in consensus as to whether events are High/Medium/Low impact.
My question in part was also asking whether there is a non Currency market that European country specific events have a more regular/higher impact on?
For example… this Monday 21st January there is the monthly German PPI figure coming out for the month of December which is rated as having a medium impact… there’s a good chance that will have little effect on the € Euro in relation to the EUR/USD or any other currency pair that the Euro works with, even if it was rated as high impact.
As I mentioned, I am such a newbie and only starting to get my head around Forex, I hear of people talk about the ‘Dax’ which I assumed was the German stock market of some type… I literally don’t know other markets types and names other than Forex.
Would ‘German’ economic data be more likely to have a higher effect on something like the DAX or any other type of German specific Market other than Forex?.. If so, where can I find out this info as to what other markets I should be looking at for the economic data is see from Germany,France,Great Britain & Italy etc?
Yes, I have experienced that trading events is tricky, and obviously I don’t have an edge over the market makers in relation to understanding or pre-empting the data etc, I think I’ve got a bit of a sneaky edge in relation to how I am using my particular trading platform that I am experimenting with
It seems odd to repeatedly get specific EU countries data (i.e German) when it is ‘High’ impact and it has absolutely zero impact on the Currency markets time and time again. It seems a waste to look at this data in relation to Forex and wondered if there was a different market that it might have more impact on ?
I don’t understand by what you mean ‘gamble on the bias with correlated and uncorrelated pairs ergo a basket of 2-4 pairs to enhance the profits’ … ?? (as I mentioned… I’m still a newbie and a lot of the terms are new to me).
Ok, this is a little more complicated, The USD is my leader this I watch the DXY If it’s going up a bull market and conversely down is a bear market. Its the ebb and flow that we traders make our money on.
Some countries and their currencies will key on certain commodities. For me, a currency is a commodity, and the forex crosses of that currency will rise and fall with that currency. Keeping mind that you have two sides of a forex pair, base and quote this is important.
Now let’s look at the USD because its the strongest currency in the world but you could do the JPY or GBP even EUR depends on your bias. So basically the USD crosses are called the majors.
You have USDXXX and XXXUSD, If the dollar, DXY is going up so are the USDXXX pairs and conversely, if the DXY is going down, then the XXXUSD are going down. You also have to weight that with market sentiment, and this is where strength and weakness come into play. And there are some excellent threads in BP for that subject. Forex
There are other correlations as well such as gold, sile, oil, etc. Pairs that follow are considered correlated. Pairs that do not follow are considered uncorrelated. Forex Correlation - Mataf.
A basket is taking two or more pairs and trading them at the same time.
So if the news event historically is not supper volatile, I will trade two to four pairs to of which may be highly correlated and two may be highly negatively correlated.
Thus an event that might only move ten pips I may earn forty pips if twenty-five pips earn one hundred pips. And without unduly increasing my risk by keeping it all under 1-2% of my equity.
Ok time for my lunch, I hope that was somewhat informative. I’m am not advocating any right or work way to trade, its what works for you.
Hi again… Many thanks for the detailed response… I understand most aspects of what you are saying, I can’t see the DXY anywhere as an option on my Platform… maybe it’s not something that can be selected to trade on it’s own? I understand that my questions are very naive but that’s OK… it’s all learning…thanks for your pateince. I have seen the German 30 on my platform, so will back test the German news data against that in comparison to the EUR/USD to see if there historically have been any greater moves… the three news calendar sites I follow have shown certain German events as High Volatility month after month, but when each month that I check back it shows nothing happened on price action on Forex so I wondered why these calendars still rate this event as High…? seems strange to me… but then again, across the 3 different calendars they usually always show quite a discrepancy between their ratings of either High/Med/Low… which again is very odd… one calendar can say an event is low impact, whereas another will say high. For now it’s best for me to stick to individual currency pair trading to keep things simple… I am going to try Non-Bias ‘straddle’ trading the news with dual ‘orders’ as it came to me as a strategy that I naturally thought would suit my Psychology after 6 months of demo trading before then searching and discovering that it was a known pre-existing strategy (albeit seemingly not too popular). I have been experimenting with all time frames, Moving Averages, Bollinger Bands, Stochastic… all of which didn’t reveal any kind of strategy that I felt confident in committing to. I have struggled with the battle between being impatient on longer term charts and over-trading (aggressive scalping on a 5 & 1 min chart) … both of which meant being glued like a hawk to the screen to watch for entry & exit points… with insufficient experience, normal technical/price action trading it just doesn’t seem to suit me. With trading events, at least there is ‘some’ kind of schedule that is in concrete and I can plan around that…I feel I need at least ‘some foundation’ in certainty for a strategy and a least news calendars do provide an potential exact entry point with the straddle method. This way I am making just 3 or 4 trades a day rather than driving myself crazy with 30 - 40 trades a day or getting frustrated with longer time frames. You seem to be pretty knowledgeable/experienced… do you have any tips/experience with straddle trading the news or straddle trading in general? Thanks again… Paul
Paul, thanks for the kind words,
I use tradingview.com for my charting because DXY is not on my platform, your could also use investing.com for mostely reliable info and charting.
also some platforms call in $DXY.
Typically as a price action trader I do not straddle or hedge, for me a trade not matter the time frame is either going my way or not. When I plan my rade I decide on my acceptable risk and sort of set it and forget it, And I have a low level of risk tolerance.
I do like the Bollinger Bands, I would use a double band set at 1% and 2% even 1.25 and 2.50 percent to trade a wider range. Along with a CCI set at 200 and 100. Trading between the plus and minus 2% deviation.
I use one live news and one callander news and don’t worry about the rest. That way I get used to them, https://www.forexfactory.com/calendar.php and https://www.forexlive.com/, Bloomberg provides a good first look for a quick getting started to my day overview and then I close it.
When I trade news I adjust my TP expectations with the news. and will treat the news as a scalp.
I don’t have that much experience in news trading because I consider it as too risky but I use these two sites which I find quite useful: https://www.forexfactory.com/ and Live Forex Economic Calendar | Forexlive. Usually use them before setting orders to check if I should expect some sharp moves or any surprises. From what I’ve seen so far, mostly the Forex pairs are affected and I concentrate on the majors.
As for the DAX, it’s a stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. It is the benchmark index for the German equity market and it is affected as well by some economical news such as ECB statements and actions, inflation, regulations and international relations. For example, I remember that there was a period when DAX index was down with a few percent due to the trade tension between US and China and the clash of Chancellor Angela Merkel with leaders of her coalition.
I think that if you’re still a newbie, try to avoid news trading until you gain enough experience and so far, don’t mix different markets. Choose only one and focus on it so you could keep things simple. This will help you to gain enough knowledge for shorter time.
Thanks Sebastiano… when I say Newbie, I mean I’ve been demo trading for 6 months full time… so although I’m still not consistently profitable… I do have ‘some/a little’ understanding of how the markets move, patterns etc. I realise events trading is very volatile and risky, but after 6 months staring at the screen, I have learned that I do not have the patience for longer time frame trading, and feel that it’s too stressful on 5/1 min time frames and aggressively scalping. I have yet to settle on a strategy that I feel confident in focusing on and really overtrade using ‘initiative’ which is very hit and miss. At least with events, there is at least one aspect that is fixed and that is the time that they happen as seen on calendars and it seems to suit my psychology. I think I am now clear in that Forex markets move more than others in relation to events so am sticking to that. Many thanks for taking the time to reply… I do feel that I have worked out some kind of ‘edge’ in trading events and am now very energised in to finally finding a strategy to 100% focus and now start to journal properly. Focusing on 3/5 trades a day in this system is better than driving myself crazy with 20/40 trades a day…My goal is a 5% funds increase per month … watch this space.
@paul1000 you’re always welcome. You’re absolutely right that Forex markets make more significant moves than other markets on certain events. Based on your comment, I would support your idea to continue demo trading until you establish a strategy which suits your needs. I agree that you should focus on 3/5 trades even 2/3 would be enough in the beginning. 20/40 trades is way too much at this stage of your experience. So for now, keep things simple and focus on the method and instruments which work for you. You have enough time ahead for further experiments
… watch this space.