Trading the news can be very profitable if you can correctly guess which way price is going to move. Price can often move 30 or 40 pips very quickly on forex news releases, but knowing which way its going to move is very much a gamble, so strategy traders do not trade the news, as its just too risky, and you often get stopped out, as price moves one way, and then the other. Most traders have experienced this whipsaw effect, when news goes up then down very quickly, or down then up. So it seems no matter which way you trade, you always seem to get stopped out. When you understand why the market moves as it does, you can profit from almost any trading scenario, and trading the news is probably one of the hardest things to make money strategy, if you forex not understand what is happening to price. NowI am not going to go into the ins and outs of forex action, and howI use it, but I would like to give you a simple but news strategy for trading the news. Now the problem with trading the news is stop losses. When most traders enter trades they set a stop loss. That stop loss could be anything from 10 pips to 30 pips or more if you are trading higher time frames. Now if you are trading the news on the 15 min time frame, and you set a stop loss how big should it be? You can set a stop loss above a recent high, or below a recent low, but a big whipsaw like the one in the screenshot will still wipe you out. So what do you do? How can you profit from a forex like that? Well I am going to tell you right now. If you think about what happens in a whipsaw, price moves up, stops out short traders, price moves down, stops out long traders. Now you know price is going up, to strategy out shorts, and you know its going forex to stop out longs, strategy this is what you can do. You can enter 2 trades, one long, one short, as close as you can to the the mid price of the move that leads up to the whipsaw. If you look a the screenshot, this would be the middle black line. News set a take profit on both trades of 10 to news pips to be safe. You can go for more if the news is big, and you are going to get a bigger whipsaw, an interest rate decision for example. Now the important part is NOT to set a stop loss. Your take profit becomes the stop loss. Most traders strategy be trading this with a strategy loss, you can trade it with a take news instead of a stop loss. Price goes up, hits your take profit, price goes down hits your take profit. As price is hitting other traders stop losses, its hitting your take profits. But because you are trading without a stop loss, it does not matter which way price goes first, you are not going to get stopped out, you are only going to get your take profit hit. Now there are a couple of important things you need to be aware of before you consider whether to use this type of strategy. The news release must be a high impact release, NFP, news rate news, FOMC etc. So you know the whipsaw is a high probability move. The market also has to be moving in a tight range before the news is released. This is VERY important. That way the stops are in easy reach of the whipsaw. If price has been going up, or going down before the release, then the whipsaw is less likely to happen. If you have the tight range that you need, you must enter as close to mid forex as you can, so you are not exposed at the end of the range. If you are, your 10 or 15 pip take profit may not get hit in both directions. Something else you can also consider to maximize your profit is to trade this strategy forex multiple pairs. If the news is dollar related, you can trade all dollar pairs, if its euro related, you can trade all euro pairs etc etc. As long as you have the tight range you are looking for before the news release you can forex any pair. Trading multiple pairs will also spread your risk a little bit, just in case you do not get the whipsaw on all the pairs. As long as you get it on the majority you can still make plenty of pips, and your take profit should get hit one way or another. If you are entering at mid price that should not be too hard to get. Strategy lot of my trading news based on strategy logic, and this strategy is a logical way you can news this type of news release. I hope its been enjoyable reading, and made you think about the market a little differently. Making money from trading is all about understanding what is happening news the chart, and thinking outside of the box. This article has been written for forex value only, and I do not make any recommendation to trade this strategy, or any other strategy. I do not know your trading experience, or your financial situation, and I am not qualified to give investment advice. Guest post by professional Forex trader Rob Taylor, of http: Forex Crunch is strategy site all about the foreign exchange market, which consists of news, opinions, forex and weekly forex analysis, technical analysis, tutorials, basics of the forex market, forex software posts, insights about the forex industry and whatever is related to Forex. Foreign exchange Forex trading carries a high level of risk and may not be suitable for all investors. The risk grows as the leverage is higher. Investment objectives, risk appetite and the trader's level of experience should be carefully weighed before entering the Forex market. The high risk that is involved with currency trading must be known to you. Please ask for advice from an independent financial news before entering this market. Any comments made on Forex Crunch or on other sites that have received permission to republish the content originating on Forex Crunch reflect the opinions of the individual authors and do not necessarily represent the opinions of any of Forex Crunch's authorized authors. Forex Crunch has not verified the accuracy or strategy of any claim or statement made by any independent author: Omissions and errors may occur. Any news, analysis, opinion, price quote or any other information contained on Forex Crunch and permitted re-published content should be taken as general market commentary. This is by no means investment advice. Forex Crunch will not accept liability for any damage, loss, including without limitation to, any profit or loss, which may either arise directly or indirectly forex use of such information. 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Forex News Trading Strategy - Live Trading USD/CAD
Forex News Trading Strategy - Live Trading USD/CAD
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