Last time we looked at some of the rationale, both good and bad, for trading the news releases. I wrote on how to trade the trends following up to the news release. I should add here, that if you are trading those shorter term movements, generally I want to be out several hours before the news release itself.
But not only is there decent opportunity to trade leading up to the announcements, but following them as well. Especially if the news is a surprise and causes a reversal, or if it is a surprise and continues in the direction of the trend. A news release that offers no surprises, either good or bad, can just be rather boring, and difficult to trade.
Trading Forex price action after a news release, is done just the same way as in the days leading up to it. Make sure you have established the direction of the trend, then trade off of the 5 minute charts. Keep your stops close, just beyond the previous swing high or low, and let your winners run with a trailing stop. See yesterday's entry for more detailed information.
Another means of trading Forex news announcements, and making a profit from entering a trade, is to look at the immediate price action after the announcement, and then just enter a longer term position. So if the market gets a surprise to the upside from a data announcement, watch the price action for 5-15 minutes, to see if there is a discernable direction. If so, you can enter on a pullback, again using a 5-15 minute stochastic, and just trail the move. It will likely last all day unless there is some other news to off-set it.
Tomorrow we will take up part 3 of Trading the Forex News, using news to augment or exit an existing trade. And we will have a very timely example from our Euro trade this week!
Until next time...Happy Trading!
Bill
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