Items Tagged With trade the news

This week has proven to be a pretty uneventful one so far.  I've made 2 manual trades, 1 which was barely stopped out and another that I closed only after getting up to date on economic announcements.  I opened a short trade on the EUR/JPY yesterday without being aware that the ECB was having an interest rate announcement this morning.  I contemplated keeping it open but wanted to remain conservative so I closed it with a 3 pip profit.  I went short because I liked the technicals but during these types of announcements, I felt like it would have been a prayer and a pure guess to which direction the pair would go.  I've made these types of mistakes before and payed for it so I didn't want to chance it.  No harm.  

I have had 4 automated trades this week, 1 for Construction Spending, 1 for Factory Orders,  1 for Initial Claims and 1 for ISM services.  These trades have profited a total of 5 pips.  

Tomorrow is the always wild and crazy Nonfarm Payrolls which I've previously reported is the top market moving indicator with an average pip range of 124 in the first 20 minutes following the release.  Read Top Market Moving Indicators

I will certainly be automating a trade for this announcement.

Other than that, the technicals on the daily charts look very bad to me this week.  Most are just hanging out in the middle of their channels waiting for something to happen similar to what I'm doing.

I've received numerous emails from traders using FX Engines who are discouraged by the past weeks results.  I am not discouraged for several reasons.

I don't think trading the news manually is better than automating it.   I also want to stress that trading either way requires a certain amount of discretion.  Just because your trades are automated doesn't mean that you don't have any options available to you.  For instance, you can automate your trades by using a Conservative, Moderate, or Aggressive method.  This week might have been a great week to use the conservative or moderate engine which I have mostly.  If you use the aggressive method day in and day out, you have to expect a greater level of risk where you may be entered into a trade on the first price tick.

The results this week are going to happen whether you trade manually or automatically but you might have lost more trading manually.  Last week was an absolutely terrible week for trading the news manually the Rob Booker way but profitable trading automatically.

I think the biggest thing is the risk reward.  I've traded the news manually using Rob Booker's stategy and I can tell you that he trades the news commonly with a 30 pip target and 30 pip stop loss.  That's a 1:1 risk/reward as you all know.  Not good.  In addition, I also believe that it is difficult if not impossible to use a 10 pip stop trading manually. 

In the previous 3 weeks of trading the news, I'm up 41 pips on 10 trades with a win % of 40.  If you trade 3 lots in a standard account, that's $1230.00 in 3 weeks.  In addition, the stress factor is much less. 

I'm not saying that automated news trading is the holy grail in Forex because there isn't one. I'm also not ready to say that this method cannot provide consistent returns.  I've said this before but this is not the only thing on my toolbelt.  It's just another "trading system" that if proves to be profitable can be used in concert with your other methods.

Durable Orders is released at 8:30 today.  I'll be using the moderate engine as I have mostly used this in the past.  Hopefully we will get some price spikes with no reversal.

I traded the Initial Claims report this morning through FX Engines using their Initial Claims Engine.  I profited 38 pips.  Not bad.  This was all fully automated and I did not do anything except subscribe to the engine a couple of days ago.  I'm not about to endorse fx engines and declare it a money machine but if first impressions count for anything, I think this has a lot of potential.

I have subscribed to the Wholesale Inventory engine for the 10 am release today but it has not triggered anything yet.   

For anyone interested in following the progress of using FX Engines to trade the news, I have added 2 new items on the top left menu named, FX Engines Trades and FX Engines Performance.  The trades section gives an individual week table of date, currency, entry and exit price, profit/loss, and the news report that was traded.  The performance section gives a week by week trade table all on 1 page.

I've managed to profit 48 pips in the last week of trading through FX Engines.  Note that all trades have a stop/loss of only 10 pips.  I had my first losing trade this morning during the release of the UK CPI.  The price spiked up, my trade was initiated, but the price couldn't get any higher.

Next up is CPI tomorrow at 8:30 am, Initial Claims on Thursday at 8:30 am, and the TIC report (Net Foreign Purchases) on Thursday at 9:00 am.  Keep an eye on the FX Engines Trades log for updates.

After 30 trades and 9 weeks of automated trading via FXEngines, I am abandoning ship.  It isn't because I've lost money because believe it or not, I'm up 49 pips.  The primary reason is because I just don't see how this system of trading will benefit me in the future. 

First, I just do not want to be reliant on anyone but myself when trading.  This method of trading put a little bit of discretion in your hands but not enough for me to feel like "I" had a good trade when the trade made money. 

Secondly, initially I thought that automated trading may be a good way of supplementing my discretionary trading income in the future.  I just don't feel that it can.  The trades that were profitable were mostly the medium volatility news trades that slowly moved in your favor.  This could have just as easily done manually.  The trades that this system is advertised to catch were just not possible.  This could very well be that FXCM is the broker and the limitation is with them.

This was certainly an experience, one that was educational.  How? It really shows that if you remain disciplined and consistent, you can come out on top or at least even.  Like I said, I'm ending my relationship with FXEngines with a 49 pip profit.  In all, I made 30 trades.  12 were winners, and 18 were losers.  The key here was also money management and the tighter stops.

To see the weekly results, go to http://www.forexproject.com/FX_Engine_Performance/

To see each trade by week, go to http://www.forexproject.com/Forex_Engine_Trades/  

This week, 3 automated trades went off during news releases with 2 of them reaping profit.  In this, week 7 of the FXEngines experiment, I profited a total of 41 pips to bring the 7 week total to +89 pips.  Wait until you see how much I lost this week with my manual trades...

http://www.forexproject.com/FX_Engine_Performance/

This was the first week that I traded the Ultra-Aggressive strategy which is explained below:

ENTERING THE MARKET
This engine uses the NEWS SPIKE INSTANT signal for market entry. At the outset of a news event this strategy will activate and begin evaluating market prices. As soon as a price spike is sufficient to meet entry requirements, this strategy will automatically enter. Once the engine enters the market, the exit strategy will take over to both protect against excessive losses and take profit.

EXITING THE MARKET

This strategy uses an unusual exit method with a signal-based stop.  When a trade is entered, a 40 pip fixed stop is initially placed but this stop is not expected to be used.  Rather, the signal stop is expected to be used.  The signal is a breakout of 5 pips below the low (for a long trade) or above the high (for a short trade) for the last 30 minute bar.  So when the trade enters, it may enter at 1.2850 long with a fixed stop of 1.2810.  However, the low of the last 30 minute bar minus 5 pips may be 1.2832.  Is is in this way that the stop varies.  It will continue to change every 30 minutes to account for the most recent high or low, and if that price is hit an exit occurs immediately.

As I've said before, I'll continue on with this experiment.

Good thing there really isn't any news to trade....

The initial claims report is released at 8:30 am this morning.  This has been my most successful news trade over the past 3 weeks with a total gain of 59 pips so we'll see how it goes today. 

Riverman from forexforays.com stated in a comment regarding FX Engines:  I kept getting caught by wild whipsaws in the price right around the news event, which on more than one occasion ended up triggering trades in both directions and taking out both my short AND long stop-losses.

This has not happened to me yet but I can see how it could.  He also stated that the initial excitement of the platform has faded and I have to agree with him.  Don't take this as meaning that I don't think it can make me pips because I really think it can (and it has so far).  As I've said so many times before, with a 10 pip stop loss and the potential of catching a news trade that has a large price spike, I don't think you're risking a lot.  I think the excitement has worn off more because there really isn't anything to trading the news.  I subscribe to an engine and it automatically triggers based on price action.  I'm not looking at charts, or calculating risk/reward, targets, or stop losses.  I'm really doing nothing!  Where is the excitement in this?  The excitement is in that 1 minute or so when you catch 30 pips and then it's gone.

On another note, check out Riverman's post from yesterday, "Signs you may be overtrading."   I can say from experience that he isn't the only recovering overtrader.