How to Make Easy Pips Trading News
April 1, 2007 by Trader Rich
I don't want to be the ultimate pessimist because I know there are traders out there that do well trading the news but it's not a sure thing for you beginning traders. I've tried trading the news with limited success but I also have a full-time job and no ability to sit and watch the second by second movement during an economic release. It easy to look at a chart during previous economic releases and say, "Wow, look at how fast and how much the market moved. It would be easy to place a trade and capture at least some pips." While it may seem so by looking in the past, you have to remember that this is not reality mainly because of your broker. Oanda increases their spreads during economic releases, sometimes by 10x, and many other brokers if they don't increase spreads, re-quote the price and your order never executes at the level you wanted it to. You find yourself late to the game or not in the game at all. It's very difficult to trade the news because of this fact. There is just too much working against you in most cases.
I don't want to discourage anyone from trying it yourself and seeing what type of success you may or may not have.
FXFisherman sent out an email last week touting their new economic calendar and forecast tool with results from trading the US Economic situation:
Feb 2007 13:00: Short EURUSD, Profit: +63 pips
Jan 2007 13:00: Short EURUSD at 1.3089, Profit: +80 pips
Dec 2006 13:00: Long EURUSD at 1.3275, Profit: +80 pips
2006/11/03 13:00: Short EURUSD at 1.2760, Profit: +80 pips.
2006/10/06 13:00: Short EURUSD at 1.2662, Profit: +80 pips.
2006/09/01 13:00: Short EURUSD at 1.2815, Profit: +10 pips.
2006/08/04 13:00: Long EURUSD at 1.2793, Profit: +80 pips.
2006/07/07 13:00: Long EURUSD at 1.2774, Profit: +80 pips.
2006/06/02 13:00: Long EURUSD at 1.2814, Profit: +80 pips.
2006/05/05 13:00: Long EURUSD at 1.2691, Profit: +52 pips.
2006/04/07 13:00: Short EURUSD at 1.2176, Profit: +80 pips.
Their stated method is to use their forecast direction, enter a trade 30 minutes before the news release and set a target and stop at the same level that they specify. I thought I'd mention this because it made me think about the difficulties of trading the news. If you followed this method, you wouldn't have issues entering a trade since it's done before the release but exiting is a whole different story!
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Such positive results. If they are true and honest surely it is, or was, a license to print money. And if it is so successful, why make it public. Smells, well, a bit fishy.
I agree… smells, “fishy”. Sucks that you have more marketers than traders in forex. You never know which one your dealing with.
I have the luxury of working from home. It’s a little easier for me to trade the news. Timing is the biggest challenge I’ve faced. You’re smartest to wait about five minutes before jumping into the trade, and in many cases the biggest part of the action is already complete by then. Still I have seen occasions where a news event triggered a move that went on for hours. I use MB Trading. I have seen 10 p. spreads (usually during low volume channeling), but typically their spreads are 1-3 pips.
Mark
Thanks Mark.
Doesn’t seem strange that Fishermens results show profits of exactly 80 pips like 8 times. Yeah, these results are definitely not made up
80 pip TP.
Trading News also isn\’t for experienced traders either if they don\’t have a system. How many news trades climb 50 pips in two minutes only to have the next bar reverse 100 pips. I\’ve seen enough to stay away altogether.
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