Trading forex news
Submitted by jackson on July 27, 2007 - 03:40.
Hi all,
I have a question about news trading. I understand news can move the market and it does but I find it hard to trade. Does anyone here trade news and how do you do it? It seems that price does not always move in the direction it should. I was just wondering if there is something I'm missing or maybe I don't understand what the news is saying.
The news give away the data, which traders interpret by looking at economic calendar's previous data and comparing them with expectations and actual results released in the news.
Usually, if the data released is within the expectation/forecasts range then there is no essential reaction to it, may be some added push in the direction of a previous trend. But when the data comes as a surprise (not what was expected/forecasted), then traders can witness the market exploding and usually it spikes in both ways, taking everyones stops and orders and then within 15-30 minutes everything stabilizes and market afterwards does only corrections.
Depending on the positiveness/negativeness of the surprise the market usually chooses the direction.
That's what i know about trading the news. But even then in my opinion news are difficult to trade.
I understand your requirement. You can read an article on Fundamental FOREX trading at http://www.forexboost.com/articles/articles/forex-news-trading.html Secret Forex Society. It’s a great way to follow the news events that we trade and get a feel about forex market.
Good luck!
Hi jackson,
I've never met a person who would trade news. A lot of people talk about it, but I believe nobody really trades news, at least on a daily basis that's for sure. I think that news trading is probably suitable for long term trading with, let's say, weekly, monthly charts. By tracking the news those traders are then able to tighten their stops, decide to stay in trade or exit...
But jumping in fire before/after the news release on an intraday basis isn't the option, take at least risk management...
Please feel free to comment.
Thanks,
Beyond
In my opinion, if you trade the news you will lose. News help to move the market, but they are beneficial only for those who had their position open before the news come. For all those who wait for the news to start trading my prediction of long time success are very poor. I don't see how one can be profitable trading the news.
Nick
actually, one can trade the news with consistent success. it is one of the few trades that are consistently profitable - if you do it right.
find the news releases coming up by using the good economic news calendar at http://www.forexfactory.com/calendar.php
trade only the "red folders"
note the price movement/pattern a few hours before the news release. is should be in a narrow horizontal consolidation pattern. if not, do not trade it.
you need to be watching the one and five minute charts. place lines above and below the consolidation to "box' it.
get a directional momentum, indicator like metatrader's "waddah attar explosion". the histogram increases as momentum occurs and the color is green for upward momentum.
when it goes, you go. hopefully your broker will fill you at a good price, but probably you will get a requote. just accept it without looking at it. speed is important here.
and don't jump the gun before a true direction appears - the price will go in both directions at first.
the benefit of the news trade is that, once it does get going, it does not whipsaw back and get you.
exit with a trigger indicator or at a pivot point. don't jump back in if it keeps going.
now use a fib to measure the inevitable retracement. do not trade it back down. but after it bounces from a fib level, you can get in again and get a second trade in the same direction.
good luck,
gibson
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