Trading strategies on news for many traders play an important role, since one news can take a very good movement, it is important to observe the nuances of such strategies.
The essence of the strategy is to catch the movement and make money at the moment of the release of important news, becauseof which, most often, the volatility of the instruments we are interested in increases significantly, and it does not matter from the direction where the price will go.
NUANCES: 1) the entry point is located outside the range, in which the price was moving before the news was released 2) place two identical deals at the same distance in different directions 3) do not forget about stop loss 4) do not forget to set take profit
What a trader can get by trading on the news 1) At high volatility, slippage can be obtained. At such a moment, the trader can get both a larger loss than the planned one, or a smaller profit, and quite the opposite. More often slippage is bad for the trader's account
2) False breakout, which can deceive you and give you a loss
3) Bad work of the broker, usually if you use the services of "Kitchen". they "process" a lot of traders on the news in their favor.
What news is it permissible to trade such a strategy on: Important news: 🔼 NFP 🔼 Retail Sales 🔼 Trade Balances 🔼 CPI 🔼 FOMC
The movement that a trader can pick up can be up to 50-70 points in some currency pairs. What currencies and why 🔼 EUR/USD 🔼 GBP/USD 🔼 USD/JPY
These are the most traded currency pairs in the world, gold is not taken into account, the expected movement in these pairs can be up to 50-70 pips.
Important to remember ❗ : 🔼 These are the most aggressive strategies 🔼 You, during the news release, have no advantages, without this it is difficult to win 🔼 And it is best not to trade before and after the news release for at least half an hour.
Personally for me though, I think if you dont understand the news and what the numbers mean, you shouldnt trade it! Being aware of past results and the likelihood of the expected forecast is your 'edge'.
Also, I've noticed that unless there is an unexpected result, the TA and FA correspond well and price shows you the likely direction whether it drops to support or resistance. I've also seen price many times have a high volume wick in the opposite direction of the trend + news result, therefore having 2 orders waiting can be a double edged sword if you're not careful!
Trading the news is my favorite thing to do. A tip for those that may be up for it:
-If you missed the impulse move, there will *always* be a pull back of atleast 38%. I like to use the 5 and 15min chart to see where price loses the momentum. Using bollinger bands, wait until the 5min bottoms out and crosses over the mid-line THEN finds support above the 20EMA. This usually suggests than price is about to retrace. For a more reliable confirmation, you can switch to the 15min chart to ensure there are atleast 2 reversal candles if there isnt an obvious switch in momentum. Most importantly, trail your stop to protect downside risk, hope this helped someone!
Personally for me though, I think if you dont understand the news and what the numbers mean, you shouldnt trade it! Being aware of past results and the likelihood of the expected forecast is your 'edge'.
Also, I've noticed that unless there is an unexpected result, the TA and FA correspond well and price shows you the likely direction whether it drops to support or resistance. I've also seen price many times have a high volume wick in the opposite direction of the trend + news result, therefore having 2 orders waiting can be a double edged sword if you're not careful!
Trading the news is my favorite thing to do. A tip for those that may be up for it:
-If you missed the impulse move, there will *always* be a pull back of atleast 38%. I like to use the 5 and 15min chart to see where price loses the momentum. Using bollinger bands, wait until the 5min bottoms out and crosses over the mid-line THEN finds support above the 20EMA. This usually suggests than price is about to retrace. For a more reliable confirmation, you can switch to the 15min chart to ensure there are atleast 2 reversal candles if there isnt an obvious switch in momentum. Most importantly, trail your stop to protect downside risk, hope this helped someone!
Great post once again!