Friday, 11 October 2019

Secrets And Reality News Trading Strategies

News Trading, or Trading The News, is a technique for trading shares, currencies (forex), or other valuable assets in financial markets based on trading opportunities that appear around the release of a news. Some news that are often the subject of the News Trading strategy are Non Farm Payroll (NFP) and Gross Domestic Products (GDP) of the United States. In the forex market, each can trigger movements of up to hundreds of pips in a short period of time, so many traders are waiting for the moment of their announcement. However, not many traders understand what News Trading is.

Misunderstanding About the News Trading Strategy Data and economic news (news) are among the movers of the forex market; this is known to everyone. However, the way News affects the market is actually different from what most traders think.

Indeed, the release of economic data not only has an immediate impact on financial markets, but also reflects the condition of the country. In this context, it can be concluded that the impact of News is not only in the moment after it was released. The majority of beginner forex traders assume that News will be directly reflected in price movements. Therefore, they then complain and question when prices do not immediately move in the "supposed" direction, saying that News Trading is "impossible". For example, when GDP data declined, the US Dollar instead strengthened, or was flat without any signs of wavering. In fact, many also apply the News Trading strategy and prove that it is a profitable technique.
It's just that there are a few things to keep in mind about this News Trading. Currency Pair And News Trading Time Not all currencies can be the focus of News Trading. In the forex market, traders generally only choose the most liquid currency pairs as the subject of News Trading. Among them: EUR / USD USD / JPY AUD / USD GBP / USD GBP / JPY, etc. Among all that, pairs associated with the US Dollar have the tendency to be affected most in the market. Also, the most bombastic news is usually released around the New York Session, because the market is the most crowded and volatile in this period. Not that there is no data release that can be used as News Trading material at another moment; it's just that this is the most profitable time. In accordance with the saying "High Profit, High Risk", then with the same direction, the greatest potential for loss. It is clear that News Trading in these times will require solid Money Management techniques, if you don't want to be crushed by price movements in the market. Various Types of News Trading Strategies Another one of the misconceptions about the News Trading strategy among traders, namely that this technique can only be done around the time of release of economic data. In fact, there are various types of News Trading strategies, and each trader can develop his own system in terms of determining exit and entry. Installing Traps on Both Sides of the Market A number of traders placed positions on both sides of the market before the release of an important news using hedging-like techniques. Here, traders open long and short positions Pending in one currency pair before the release, but new execution is carried out after the news comes out. They may experience loss on one side, but are expected to get far greater profits on the other side. There are several variations of this type. The first variation, once economic data numbers are released, traders will take profit from the first trading position. At the same time, the trader leaves the only loss position to float until the market returns to its normal course after the euphoria of the news release ends and the amount of loss decreases. The second variation, traders place stop losses on both sides. Once the stop loss on one side is touched, the lone winning position is left floating to get additional profit or be liquidated as soon as possible, according to market conditions. This variation has been practiced by one of Seputarforex's writers and his experience is contained in the article Utilizing Market Euphoria at Release News. Long-term Trading A number of academic studies show that the impact of a number of economic data releases can extend to weekly or monthly periods, more than just one day when the announcement.

Some of the long and large impact data are the Non Farm Payroll and Federal Reserve interest rate decisions. Although the market does react spontaneously, the consequences of the mechanism of interest rates and employment conditions will remain in the long term in various economic sectors.

That is, using these data as the basis of the News Trading strategy in the long run is certainly possible. Traders who use this technique usually build their position little by little based on economic data that is released not too often, such as quarterly GDP. They also usually compile a compilation of updates and revisions of other important economic data it pairs that are traded from time to time in order to determine whether the direction of price movement of a currency or pair going forward is leaning on bullish or bearish, then opening a position in the direction of its conclusion. Details like this seem to be behind the success of a number of billionaires in the world.

Short-term Trading To implement a News Trading strategy with short-term profit targets, the trader must first have a clear picture of what kind of News can be traded. In addition, a trading system containing criteria for conditions in which entry and exit positions are installed also needs to be arranged. Traders also must be truly disciplined in applying the methods that have been made. An example is as described in Ala Cory Mitchell's Simple NFP Trading Strategy.

Developing News Trading Strategies One thing that every trader needs to keep in mind is the element of market uncertainty. No matter how we have prepared the system, there is still a possibility of loss because the conditions are not in line with expectations. Likewise in News Trading. Market reaction to any economic data, the truth is unpredictable. There is a possibility that the data will be released according to analysts' expectations spread by financial news agencies, but there are also times when the results of the release are very far from estimates. More than that, it's almost impossible to guess how volatile the market's reaction to a News Release is. It could be that the market moves 50 pips, 100 pips, 200 pips, or it doesn't budge.

The direction can continue the previous trend, can also reverse drastically, or just flat. Sometimes even the movement of 50 pips is immediately returned by turning 150 pips. The cause of uncertainty is the large number of speculators who play in the market and all of them intend to get instant profits. This will trigger spread and trading volume to increase in a short time. However, at the same time, the technical background of price movements will fade. After "ninja" traders like this come out of the market, it's Momentum Trader's turn to jump into the market and compile short-term trends. All of this does not mean that News Trading is impossible or difficult. News Trading is not much different from the technique of looking for opportunities in other forex markets.

What a trader needs to keep in mind is that he is involved in a probability game. He needs to understand that he cannot make sure the market is moving in a certain direction, so that proper money management and risk control needs to be applied. Stop loss should not be too tight, while the combination of Leverage and Position Size should be moderate.

Taking into account all of that, the arrangements that need to be considered in creating a News Trading strategy include: Will it open a position only if the data has triggered turmoil in the market? How big fluctuation (in pips size)? Or opened before the turmoil appeared? What is the expected data threshold, and will trading positions be opened above, below, or between the two? How long will the trading position be left floating? At what technical level will Take Profit and Stop Loss be placed? A News Trading Strategy needs to be created before the time of news release. When the awaited moment arrives, the trader needs to move like a fully automated EA robot to obey the strategy, to be free from the market behavior that is often irrational and filled with euphoria.

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