Announcement of important economic occasions and news, as a rule, gives rise to high volatility in the foreign exchange market. Thought-out approach to the trade and precise observance of the rules at this moment will provide you with a lot of profitable transactions in a month.
For all the time as the Forex market exists, it has created thousands of different strategies. However, the forex market is chaotic, dynamic, and constancy is alien to it. Coined strategies either did not work at all or stopped working after some period of using them.
After all, sooner or later, any strategy will fail and must be updated. But from thousands of good forex strategies, we can find more than a dozen universal trading systems that will work across hundreds of years.
I wonder – what are these strategies? This is the tactics of the channel, trading on a breakout, trading on the news, etc. Now we will look through the trade on the news.
Its essence is affecting specific bargains during the release of economic news that has a high degree of importance. It is important news! The strategy is based on strong price movements. Particularly important news – is the majority of news related to the U.S. and published in 13:00 – 16:30 GMT. There is some belated news in the 17:15 – 18:15 GMT.
There is the news arising the great interest: about interest rate changes of the world’s leading banks: ECB, Bank of England and the U.S. Federal Reserve; GDP, Non-Farm Payrolls – are parameters of the state unemployment outside the agricultural sector in the U.S., data about the trade balance, data about inflation, as they cause quick price movement.
Time of the announcement of the above indicators is known in advance. 99% of the price will move abruptly in some side. It is challenging to forecast the direction of price movement after the announcement of the news.
Regulations of strategy “Trade on the news”:
1. Do not play with a large lot
Undoubtedly, Money Management is vital to be always respected, and when trading on the news, mainly. If you are trading 1 / 10 part of your deposit, lower the risk to 1 / 15 or higher. And if you are trading with only 1% of the deposit, then nothing should be changed because this is an allowable minimum.
2. Do not open the orders before the outlet of the news
Too early opening of the position threatens with losses. Before the publishing of data, keep yourself in the hands and do not be in a hurry.
3) Set your orders rightly
Be ready about 15 minutes before the announcement of the news: set at once two pending orders from the current price: Buy-stop and Sell-stop with indented paragraphs 30-35 above and below the current price of the necessary currency pair.
Stop-loss should be short. Define by yourself take-profit and Trailing-stop thus, once you envisage two versions of events. The most important thing – is not to set orders nearby the current price.
Before the date of declaration of the news, it will undoubtedly be small oscillations of the price in both directions. And if your pending orders are nearer than 20 points from the current price, they can be caught by market fluctuations.
Further – we are waiting for the release of the news. If in 1-2 minutes after the announcement of data, no order has worked, we remove them. And if one order is opened, then remove the second instantly and watch how profit is increasing.
The strategy of “trading on the news” is not new. You may safely use it because it is time-tested. Only you should follow the basic recommendations when working on this strategy.
Currently, people are looking for additional or even primary sources of income as never. The world economy is still in tough condition, and to get a well-paid job is quite hard. And forex is one of the ways to make some money.
To trade successfully, one needs to know events on the market, so live forex news is of great help here. Those who don’t know where to get fx news can take advantage of the online network. Just type “forex news trading”, for example, in Google or another search engine, and you will get many news sources to choose from.