Hello traders,
Trading only until now with technical analysis as day trader,i like to upgrade my strategy looking the fundametal too.
I would like to ask
1.Which time frame should i use, to get into a trade according some high impact news release?
2.How much is the average moving in pips for the currency pairs?
3.How long can a new ipmact the price of the market?
First of all, it should be clarified that trading on news is not the same thing as doing fundamental analysis. You’re talking two entirely different time frames. Fundamentals related to valuation, which tends to be a long-term consideration. News influences prices in the short term. We’re talking probably minutes to hours. It depends on how much the news was anticipated and how far off from expectations it is.
I agree with Rhody… and he knows his stuff 
Often times, news are ‘used’ by market makers to move price, rather than the other way round:
this means that it is not the news that moves the markets per se, but rather it is an expected time
of high volatility which gives algorithmic trading the opportunity to move prices quickly …
Remember that no human trader at institutional or hedge-fund level would ‘trade the news’… I really
think that this is a retail trader obsession, trying to catch volatility when professional ‘humans’ do not…
Traditionally, human traders would ‘trade the fade’, waiting anything between ten and twenty minutes
after a news release, for example, to see how price had digested a news release… Yet, sometimes, like
in the case of the FOMC rate decision last Wednesday, all you get is a flash of volatility in the immediate
few minutes of the news release, and then all goes quiet… This is because machine/algorithmic trading
has a draining effect on liquidity (a topic of much debate - some argue that this adds stability AND liquidity,
while others say that it limits opportunity for non-algo traders (e.g. investors)).
Anyway, fundamentals are indeed concerned with longer-term, macroeconomic themes, rather than price
itself as a pip-by-pip analysis: you must specialise in following a theme…
For me, for instance, this has meant, in the last eight months, specialising in following the ‘global risk aversion’
theme, holding long-term positions (short British and American equities), as well as a Pound-resurgence theme
(long Pound versus Euro and Kiwi): this is based on my own conclusions and analyses of a series of factors, not
to do with ‘technicals’ per se but more with continued mid-term and long-term evaluation of sentiment for EuroZone
and New Zealand, in the case of my Pound long positioning, and of sentiment for world equities and the ‘risk-off’
scenario, in the case of my S&P500 and FTSE100 shorts: this evaluation, or fundamental analysis, has little to do
with day-to-day news releases, with ‘technicals’, etc. although I do look at them and they help building a picture
because by monitoring price reactions to those news events you can sense how sentiment may be building in your
favour or staying flat, or starting to turn (slowly) against you…
Fundamental trading done on this scale is like investing in stocks, but I think that it is used in Forex by institutions
and retail traders can position in a similar way, using very low leverage (I use 1k positions) and letting a ‘theme’
evolve through time. I have sat through a drawdown of over 5,000 pips and thought nothing of it; my target is
between 5,000 and 10,000 pips in total, so when you trade like this you are not concerned with daily fluctuations
or ‘flash’ moves after news releases, unless those news releases fundamentally change global themes, like ‘risk-on’
and ‘risk-off’… For example, the Swiss Franc catastrophe of January 2015 did not change the course of world equities…
the S&P500 did not crash because of it, for example, nor did the FTSE100… Yet the Chinese market crash of Aug. 2015
did have a greater impact…So, for example, if you were a long-EUR/CHF or long-USD/CHF trader in January 2015,
your trading world would have probably come to a cruel end that day, and you would have thought that some kind
of trading apocalypse had come to the markets, where, instead, a long-term/‘investor’-type trader would have looked
beyond that, provided that they too had not suffered too much damage in their positioning…
If you look at how much ground the USD/CHF pair has recovered since then, for example, or how much ground
the S&P500 has recovered in the months after the Aug. 2015 market crash, you can see how little relevance
some reactions can have when seen from a wider angle… It is like looking at the Earth from space, where all
seems quiet and peaceful, versus being on Earth and knowing its troubles when you are directly affected by them…
Hi,
First of all thank you,that you both clerify me the diferrence between fundametal analysis and the news release trading.
So PipmeHappy tou tell me that is not good opening a trade influenced by news release? I think only looking the news is not good too,but combined with technical analysis maybe the news can do a breakout in the market,right?
If you really are following the market very closely and can get a good read on market expectations going into news items, then you can trade off them. If you don’t have that level of feel then you run the risk of getting whipped around in the post-news reaction - even if you’re using technical analysis.
There are (allegedly) retail traders who do well by “trading the news”.
The only people I know who are [I]steadily[/I] profitable, that way, are institutional or semi-institutional traders who have enormous experience of it.
For most of us, and [I]especially for intraday traders[/I], it’s something to be avoided, in my opinion, partly because it’s so common to have spikes in both directions that it’s very easy to get the overall direction [U]right[/U] and [U]still[/U] lose money. And stops may not be executed in such fast-moving markets. There’s a reason why so many prop-firms have absolute and inflexible rules that their traders are flat immediately before, during and immediately after all scheduled, relevant news announcements.
Hey guys! Maybe someone can help me out. How to combine moving average with live trading?
You don’t have to take fundamentals into account, unless you’re dealing with NFP.
As for NFP, all I can say is don’t trade that day. It messes up the markets hard.
If you wanna trade the news, I suggest that you don’t base your analysis on economic data. The charts already send the message prior to the news. You just have to analyze it.
If you wanna know the time frames where price volatility is visible, well, H4 or H1 or lower. But yeah, I suggest you stick with technical analysis or price action. You don’t have to worry about the pips.
Bottomline: Price action will easily help you with catching big moves. You don’t have to risk your butt.