The news trading market is fascinating to many investors. Therefore, most traders would rather stay out of trading at the time of the news release , such as that of the NFP Report as well as those of the FOMC Meeting Minutes. However, there are traders who have taken up the job that involves trading in news. But, news trading is not without an instant satisfaction. In a matter of seconds, if you are able to predict the direction of the market accurately, you could earn hundreds of pips. Compare this to the majority of day traders who earn these many pips in the space of weeks.
Trading news is for traders who want a lot of action in a short amount of time. Strategies for trading news are based on the idea that prior to any planned news announcement, the market creates an expectation of the economic figures that are expected to be announced. If the actual numbers are announced, if there’s an extreme difference between the actual and expected numbers number, there could be an immediate reaction from the market.
Imagine that you are an investor who would like to trade news, despite the fact that a lot of traders are reluctant to trade it. What are the best way to do it? There are three main methods to trade the news. Visit:- https://delawaredigitalnews.com/
The first strategy for trading news involves placing bets on the market’s direction and then entering the market prior to the time the news announcement is made. The second strategy for news trading involves waiting for news to be released before attempting to enter the market. The third strategy for news trading is a mix of the two strategies above. Let’s look at one of the strategies in depth.
Suppose, you are a pro active trader. You’ve been following the market prior to the NFP Report announcement and you want to be able to make an educated guess about the direction of the market in the wake of the news announcement. Therefore, you go into the market about 20 minutes prior to the time of the news release. The advantage of this is that you avoid spreading of spreads that typically occurs at the time of the news release. You entered the market well prior to the time of the release in the days when spreads were narrow. You now place your bet on the direction of the market by either going short or long. Set a stop of 30 pips below the entry point if you are trading long and 30 pip above the entry in case you are on an option to trade short. Then, wait for the announcement to be made.
It is now dependent on the accuracy of your prediction about the direction of the market. If your prediction was correct and the market moved in the exact direction you predicted then you can close the half of your position when the market changes in the direction you put on the line. In this instance, 30 pips! The remaining portion put an exit stop that is trailing with 20 days of Simple Moving Average in order to profit from the movement to the maximum extent possible. If the market moves in the opposite direction, your stopping loss is triggered and you will be out of the market, with the loss of 30 pip!
The strategy will use the chart of 5 minutes for this strategy for news trading. You may be wondering why you should exit the entire position when the market was moving to your advantage. This was done in order to minimize the risk and to make profits as fast as is feasible to avoid any whipsaws that could develop within the market. The most important aspect of this strategy for trading news is to anticipate the direction of the market at the moment of the announcement accurately.