Advanced system #4 (Early bird Breakout System)

Hi Edward,

Could you let me know whether there are any adjustment we should make to this strategy or should we trade this Early Bird strategy at all if on that particular day there is or are important news announcement later on in the day eg like Non Farm payroll which can drastically move the currency pair concerned.

Please let me know. Thank you for all your kind help to us traders.

Tom
Malaysia

Hi Tom,

Good question.
When huge news like Non-Farm Payroll are due I do the following (with whatever strategy I choose to trade that day):
1. Analyze forecast reports. The prognosis tells me in advance what to expect, e.g. whether news for the currency are expected to be positive or negative, which helps to decide on the direction I want to trade that day: up or down.
2. Trade my regular strategy normally, however, pick only those signals, which comply with a chosen direction: e.g. if upon news forecast I decided to be a Seller, I should take only Sell signals that day.
3. If my strategy gets me into the trade before news time, I double check that my Stop Loss order is in place and then trade according to the regular rules.
4. If I haven't had any positions running, I never enter a trade during news release and make sure all pending orders are canceled before news hit the air.
All-in-all, the idea is pretty simple:
look at forecast and choose your trading position. If trading opportunity comes before news, take it and trade normally, make sure to set a stop order. When news come, don't initiate any trades. After news, wait for at least 20 minutes before considering new trades.

Regards,
Edward

Ok thank you Edward. I think I know what to do with regards to important news to be announced later on in the day with Early Bird breakout.

On the opposite occasion of no important news from Europe or U.S. to be announced regarding my Eur/Usd pair, is that particular pair likely going to have any breakout in any one direction at all on that day? If it does, what could be the possible reasons?

Thank you for your helpful replies to us traders. Cheers.

Tom

Hi Tom,

There will always be a movement in Forex market due to huge volume of participants.
And those participants, they don't live in a news-to-news cycle, they constantly evaluate the market and make investments.
Also many Forex traders give preferences to technical analysis vs fundamental.

Regards,
Edward

OK thank you Edward. I appreciate it.

Dear Edward,

The Early Bird breakout is a good strategy to use. Could you let me know the rationale behind using the Highest High to Lowest Low from 00:00 to 4:59 EST? I've been using the strategy without knowing the reason behind the 5 hour range. Please let me know.

Cheers
Tom

Hi Tom,

First few hours in the morning price is often hesitant to move in either direction, it looks up and down trying and testing the strength of buyers and sellers, examining closest support/resistance levels from yesterday. By 5am the choice is made. Some even say that by 4am it is all clear. I've found that with the 4th morning candle price makes its first major turn.
Keeping that in mind I've come up with a range given in the strategy.
Overall, it's a result of observation and finding common patterns.

Regards,
Edward

Thanks Edward for the useful reply.

Cheers.
Tom