Do you trade economic announcements?

[MarketMoverTrader]

Most traders I have spoken with get out of the market around economic announcements (GDP, Unemployment Claims, etc.), because they don't know how to handle them I guess.

I trade econimic announcements only and have been quite successful at it. But I'm learing a method deveolped by some guys who have learnt to do this over a number of years.

I've heard all the reasons why I'll never be successful trading this way and why it can't work and that I'm an idiot/gambler/cowboy-trader.

I'm not really looking for any more of that stuff (I've heard it all), but I am really interested if anyone else here trades announcements and if they also find it successful, enjoyable, or (dare I say)easy.

I trade them on the S&P e-minis and I like it because I can schedule my trading times into my diary a week or 2 in advance, thus I can run my business full time and stop at a particular time (usually 1:30 or 3:00pm) to trade in my day.

The theory is that it is one of the few times that the market is almost guarunteed to move... and movement's all we need to take profit (or loss of course), right?

I'd be interested to hear from you if you do this as well, or if you've ever tried it. Thanks.

 

[Yoshie]

I do that although you must be sure of your fundamental; i remember when Q2 was announced the US dollard actually went up by like 80 pips in first 30min?( i was like WTF but i didnt falter vs CAN before going down

 

[kwickwool]

I find that trading major news and movement can be a great way to profit if you are familiar with what is going on. Whenever there is major movement in the market be it an announcement, interest rates, unemployment data understanding how the market is reacting is key and one of my favourite trades is when for whatever reason the market moves suddenly, waiting for the first pull back and then jumping in and go with the trend?

 

[MarketMoverTrader]

I use techniques where I combine reading the fundamentals with technical analysis within the first few minutes after the announcement. I can try to catch either the initial movement, the retracement, or the similar movement - or any combination of the 3. I rely heavily on support and resistance levels and it pays off I find.

 

[bbmac]

I would echo the responses in posts 3 and 4 above. Each one is different, but given the right pa circulmtances and a definate reaction to the data released, opportunities for the profitable exploitation of such do exist. I tend, far more often than not to be flat going into a 'major' data release but such opportunities can develop on the other side. Not all data releases are created equal though and you have to pick and choose for the highest probability opportunities.

G/L

 

[leerees]

I stay out of economic announcements but I am keeping a journal and trying to understand the relationship between the currencies and events. In the future I may progress to a hedged strategy for trading news events, I use hedge trading quite successfully for trading oil finds in oil stocks. It's not uncommon to come out of a trade +15% in profit.

 

[MarketMoverTrader]

You should try announcements on the e-mini futures contracts - I often come out with 15 - 30%+ in one trade. And I love the fact that the trades are only a few seconds to a few minutes long. I keep good trade journals/records to keep better understanding how the market reacts to each particular announcement.

 

[moose88]

What about slippage? That's what keeps me from trading the news.

 

[MarketMoverTrader]

I deal with it. My broker's software has a tool to limit slippage to a predefined amount, like 2 ticks for example. And if I don't get filled I use support and resistance levels, as well as technical analysis, to catch a retracement or a similar movement. Slippage can be a problem, but it's not a very big issue for me. It was at first when I didn't know how to handle it properly.

 

[Martinghoul]

Good luck... For me, trading economic announcements is too much work combined with an extremely low expected Sharpe. If you can make it work, great.

 

[MarketMoverTrader]

It's funny how perceptions differ. I find just taking half an hour a few times a week to prepare for and execute a trade much less hard work than many other methods of trading. With the right tools and experience I can read the data and get in and out of a trade with little fuss. Also, only swinging at high-probability trades and letting the others pass me by results in a very high win ratio, so it provides me a good return at the end of each month. Of course, good risk management and capital preservation needs to be kept as a higher priority than taking profits. That's not always easy to do.

 

[Martinghoul]

It's funny how perceptions differ. I find just taking half an hour a few times a week to prepare for and execute a trade much less hard work than many other methods of trading. With the right tools and experience I can read the data and get in and out of a trade with little fuss...

Yes, I know the feeling... When I started out I thought the way you do now in some ways, but, as I gained experience, I learned my lesson. Best of luck to you!

 

[MarketMoverTrader]

I feel my way of thinking has been formed by the results I've gotten. I often get wished 'luck', but I have the feeling that even if I did this successfully for another 5 years some people would still tell me my lesson is still to be learnt. But that's a moot point because we can't speculate about 5 years from now - this works for me so far, and time will tell if it continues to.

When you say you gained experience... you got burned, or found something better to do, or did you learn something I haven't thought about yet that you could share? Is the lesson you learnt something I can only learn with experience, or can I learn a bit of it from you now? Thanks

 

[Martinghoul]

Well, it's great that you have been able to get good results doing what you've been doing. Given that we're not discussing any specifics of your performance, the only thing I can do is wish you luck. Likewise, knowing nothing a priori about you and your approach, I simply can't automatically conclude that the results you've gotten are due to your mad trading skillz. Hence, my best wishes.

As to my personal experience, there's no secret. I have discovered that, relative to other strategies I can use, trading economic announcements offers a very low Sharpe ratio. The combination of high volatility and the complexity of producing a meaningful forecast eventually meant that I stopped punting that way. In general, my principle is simple: when evaluating a method/strategy, I always try to explain to myself, in common sense terms, why I am likely to make money with it (if you wanna be fancy, I like to define what my edge is likely to be). After a while I realised that I couldn't see why I, of all people, would be able to outperform lots of sophisticated and extremely fast machines and a whole lot of people, most of whom are probably a lot more intelligent and knowledgeable than me. So I stopped.

My situation may be completely different to yours. For one, I don't believe in technical analysis. At any rate, if you have made it work for yourself, great and more power to you.

 

[kwickwool]

You will probably always get slippage on trading news that goes against you or trying to jump in due to the big volitility at the time and each case needs to be looked at in terms of the movement, news etc etc. Most of the time I am out of the market prior to any major news due to this but watch avidly once the news is announced and watch the market movement avidly. One of the most profitable and statistically high probability trade is when major news really drives the market the first retractment of the price wether this is FX or FTSE/DOW etc is a great re-entry point and can be as very high probability trade. Using BBMAX system here as in using OsMA to determine this on 1min charts is normally good enough to really see the market movement here and ideal re-entry point, although just looking at the chart you will naturally see this anyhow.

 

[forker]

I would be interested to see the results over say 6 months of trading only the news! Any of you want to share?

 

[MarketMoverTrader]

I run a blog - I only trade the news, because of time constraints with running my business. www.marketmovertrader.net