News trading is intriguing for a lot of traders. As a outcome most traders prefer to remain out of the market place at the time of the news release like the NFP Report or the FOMC Meeting Minutes. But there are traders who have adopted the profession of trading news. News trading requires a sense of instant gratification. Within seconds, if you can predict the market direction properly, you can make a handful of hundred pips. Now, evaluate this with most of the day traders who make these significantly pips in a matter of weeks.
Trading news is for these traders who like a lot of action within a quick period of time. News trading strategies are primarily based on the truth that just before any scheduled news release, market develops a certain expectation about the financial numbers that will be released. When the actual economic numbers are released and there is a wide deviation among the actual and the expected, there will be a knee jerk reaction in the market that will subside following some time.
Now, suppose you are a threat taker who wants to trade the news regardless of the reality the many traders keep away from trading it. How to go about it/ There are generally three approaches, you can trade the news. The initial news trading technique involves betting on the market place path and entering the industry ahead of the news is released. The second news trading approach entails waiting for the news to hit the market place and then getting into the market place. The third news trading approach entails a combination of both the above two methods. Let’s discuss the first news trading approach in detail now in this write-up.
The initial news trading strategy is for the pro active kind of traders who want to take action just before time and then wait for the news release to reap the outcomes of their action. In the 1st news trading method, you enter the marketplace prior to time let’s say 20 minutes before the actual time of the news release. Performing this has particular positive aspects. At the time of the news release, brokers widen the spreads and make trade execution hard. So by generating an early entry, you are avoiding each these troubles. You entered the marketplace when the spreads had been tight. You make your bet on the market place path by going lengthy or short and putting a 30 pips stop.
News trading is all about predicting the industry path properly. If you can learn the art of predicting the market path at the time of the news release correctly, you can make a fortune. If the market doesn’t move in your path, the cease loss will be hit and in case the market moves in your favor, take profit on half of the position and for the remaining half of the position trail a quit with a 20 day SMA. This will help you capitalize on the move as significantly as possible.
What will be the time frame for this news trading approach? You should be making use of the 5 minutes chart. Now, you may ask this question why close half of the position when you could have continued to take profit. This is accomplished to decrease risk and take profit rapidly and let the remaining position continue with a trailing cease to capitalize on the market place move as much as achievable.