We see lots of new traders in the chat here on Trading View making poor decisions around news based trading. Yes, catching a big move can be profitable, but it is a gamble and one that we as money managers should not be willing to take.
Ask yourself this, if you had $1m of client money at stake, would you bet on the direction of a short term news spike?
A much better way of trading the news is to let the market tell you which direction you should trade, then trade off of a Fibonacci level or a retest of structure.
- Wait for the initial move to give you direction
- Place a Fib study from the swing high to swing low
- Wait for price to retrace into fib/structure level
- Place your entry and stop loss accordingly
A few recent examples of our trading method can be found below:
EURUSD: Two orders opened. the first was opened 2 pips above the 38.2% , and the second was opened 2 pips above the 61.8% .
USDCAD: Two orders placed, one at the 38.2% Fib and 1 at the 61.8% Fib, however only 1 got filled.