How to be a Successful Forex Trader Segement 8
Trading before News
News is a fact of Forex trading and while their are several ways to trade the Actual release and it's aftermath, today I want to focus on trading before the News. Understand that the decision to enter the market before News is a conscious one and you don't have to do it. Prime examples are days where interest rates, for a currency you contemplating trading, or Non-Farm payroll are being released. if you intend on trading before news, you must determine whether you are going to stay in the trade during the release or get out. Personally, I usually do not trade on UK interest rate days because the market, at some point, tends to go flat ahead of the release. I certainly do not want to be in the market at the time of the release. The reason is simple, I have no control!!
My methodology is based upon high probability trades with tight stops (20-30 pips). Having a position on at the time of the release gives up both my probabilities and my stops.
there are 3 possible outcomes:
1) if the release comes out against me, I'm toast, I will take a hit 3 to 5 times what I plan on (as most of you know slippage will cause the stop to be disregarded and or executed at the extreme of the move).
2) it comes out as expected, the trade may be okay but the market may whipsaw and with an expected widening spread, might get taken out anyway.
3) if the news comes out in my favor, I may still get taken out by either a quick whipsaw or widening spread or a combination thereof.
How can we make an informed decision on whether to trade or not to trade. In the last segment I talked about documenting and reviewing your trades. I use my documented trades to make my decision. This week, the UK had News releases on Tuesday, Wednesday and Today. On prior occasions, my trades set-ups were not effected by UK employment and retail sales (Tuesday and today's releases) so I opted to trade on those 2 days. yesterday (Wednesday) UK CPI was being released and historically my trades set-ups did not work, so I did not trade yesterday. (which was a good decision).
The last thing you want to do is be in a trade ahead of news and "Hope" that the news bails you out. Far too often I have been bit by that bug. Please don't find yourself in that position.
Just wait their are plenty of opportunities. In the next segment I will discuss how many trades do you need.
I hope you enjoy this post and find it helpful. I would appreciate if you "like" it and follow me :)
Stay Green my Friends :)
Allen
News is a fact of Forex trading and while their are several ways to trade the Actual release and it's aftermath, today I want to focus on trading before the News. Understand that the decision to enter the market before News is a conscious one and you don't have to do it. Prime examples are days where interest rates, for a currency you contemplating trading, or Non-Farm payroll are being released. if you intend on trading before news, you must determine whether you are going to stay in the trade during the release or get out. Personally, I usually do not trade on UK interest rate days because the market, at some point, tends to go flat ahead of the release. I certainly do not want to be in the market at the time of the release. The reason is simple, I have no control!!
My methodology is based upon high probability trades with tight stops (20-30 pips). Having a position on at the time of the release gives up both my probabilities and my stops.
there are 3 possible outcomes:
1) if the release comes out against me, I'm toast, I will take a hit 3 to 5 times what I plan on (as most of you know slippage will cause the stop to be disregarded and or executed at the extreme of the move).
2) it comes out as expected, the trade may be okay but the market may whipsaw and with an expected widening spread, might get taken out anyway.
3) if the news comes out in my favor, I may still get taken out by either a quick whipsaw or widening spread or a combination thereof.
How can we make an informed decision on whether to trade or not to trade. In the last segment I talked about documenting and reviewing your trades. I use my documented trades to make my decision. This week, the UK had News releases on Tuesday, Wednesday and Today. On prior occasions, my trades set-ups were not effected by UK employment and retail sales (Tuesday and today's releases) so I opted to trade on those 2 days. yesterday (Wednesday) UK CPI was being released and historically my trades set-ups did not work, so I did not trade yesterday. (which was a good decision).
The last thing you want to do is be in a trade ahead of news and "Hope" that the news bails you out. Far too often I have been bit by that bug. Please don't find yourself in that position.
Just wait their are plenty of opportunities. In the next segment I will discuss how many trades do you need.
I hope you enjoy this post and find it helpful. I would appreciate if you "like" it and follow me :)
Stay Green my Friends :)
Allen
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