Is it easy to make a killing on betting just prior ti announcements?

[qwertyuiop1]

Is it easy to make a killing on betting just prior to big announcememts (E.g. Interets rate cuts etc.)

E.g. Lets say there is an 80 % chance of teh fed cutting by 25bps - and a 20% chance of a zero cut according to the markets.

That way - if something that is affected by fed cuts was trading at,say, 10 - and a 25bps cut would results in it going to 15 - and no cut means it stays at 10.
Therfore - presumably just before the cut,it would be priced at 14 given that the market will have factored in the 80% chance of a cut yes?

In which case you put a stop-loss at 13 - and get even money at a 1/4 shot.

(By teh way - I'm only completely speculating here with my theory)

SO - how easy is it for someone to do that literally just before teh fed announce their decision (That way being as least susceptible to noise as possible given teh short time frame)

IS this something that people do?

I'm a beginner at this game - so for all i know maybe everyman and his dog is at a similar strartegy - or perhaps for some reason unknown to me this strategy could never possibly work in practice.

Hence the question I guess.
Perhaps people use this on teh dollar,or gold perhaps?

 

[gooseman]

stops depend on there being orders in the market to hit plus the market would have priced in those probabilities already.

 

[shadowninja]

Trading news is not for beginners. Easiest way of losing money in the long run. It isn't so much trading the news as trying to trade the reaction to the news.

 

[fifty2aces]

Since the markets price the move in, you only stand to benefit slightly if you are right, whereas if you are wrong, price will make a big move against you. This is pretty poor risk reward

Also, the big announcements cause a lot of volatility, so even if you are right, you can't put a stop too close, as price is likely to move against you before it goes in the expected direction. If you are wrong, the move will be FAST, as no one expects it, so even with your stop order in place, you can expect a decent amount of slippage.

Conclusion - leave news trading to the professionals.

 

[qwertyuiop1]

Trading news is not for beginners. Easiest way of losing money in the long run. It isn't so much trading the news as trying to trade the reaction to the news.

But am I not correct when i say you are getting evn money on a 1/4 shot ? (Assuming teh stop in place)

 

[Trader333]

Is it easy to make a killing on betting just prior to big announcememts (E.g. Interets rate cuts etc.)

Not if you get the direction wrong and you will often find that your stop price wont be what you set it at. As others have said this requires a fair amount of skill and those that are successful a trading news do so after the release and not before it.


Paul

 

[qwertyuiop1]

Not if you get the direction wrong and you will often find that your stop price wont be what you set it at. As others have said this requires a fair amount of skill and those that are successful a trading news do so after the release and not before it.


Paul

Yes - but if you figure you have an 80% chance of getting teh direction right, then yuou'll only be wrong once out of every 5.
And you're getting even money.

As i say - a value for money bet.

 

[gooseman]

where do you derive your precentages from? the futures/options market?

 

[arabianights]

Why do you reckon it'll be even money?

 

[black bear]

News, best use imho is if you usually or it is part of your method to enter at price level

News sometimes gives you a little bonus if you now where you would like to get in before hand

 

[davidnmfarrell]

If you were thinking of doing this on SB and avoiding the problem of requiriing a buyer for your stop... As I experienced today, CMC markets won't let you place a SL within 1000 pts of a dollar pair on the day of an economic announcement; today there was the MBA announcement for example, and I had to close my EURUSD trade early, as they wouldnt let me place a stop !

Interesting thing was that I had set a stop hours earlier, which I cancelled to move it... I wonder if I had just left it in place it would have worked? Or would CMC ignore it and claim slippage? Maybe we can test this tomorrow with the BoE announcement

 

[black bear]

Not the best plan imho

If you were thinking of doing this on SB and avoiding the problem of requiriing a buyer for your stop... As I experienced today, CMC markets won't let you place a SL within 1000 pts of a dollar pair on the day of an economic announcement; today there was the MBA announcement for example, and I had to close my EURUSD trade early, as they wouldnt let me place a stop !

Interesting thing was that I had set a stop hours earlier, which I cancelled to move it... I wonder if I had just left it in place it would have worked? Or would CMC ignore it and claim slippage? Maybe we can test this tomorrow with the BoE announcement

Hi

I would not bother if I were you, can not see them letting you get away with that, hell I have been slipped just because of some fast random bar on occasion

 

[qwertyuiop1]

where do you derive your precentages from? the futures/options market?

Ya - the futures market.

You often hear it on bloomberg that there is a certain specific chance of such and such an increase.
E.g. 77% chance of a 25% increase.
12% chance of no increase
11% chance of a 50% increase.

 

[qwertyuiop1]

Why do you reckon it'll be even money?

If you look back at my example, then at 80% chnace would push it from 10 points to 14 points - teh last point would then come on confirmation.

So - with a stop loss at 13 then it pays even money for a 1/4 shot.

Obviposuly my example was just used to illustrate muy theory.

 

[fifty2aces]

If you look back at my example, then at 80% chnace would push it from 10 points to 14 points - teh last point would then come on confirmation.

So - with a stop loss at 13 then it pays even money for a 1/4 shot.

Obviposuly my example was just used to illustrate muy theory.

1) Even money bets will lose money due to commissions

2) Volatility is massive around these announcements, so you may be stopped out even if you guess correctly.

3) Slippage will mean that your 13 point stop will be executed somewhere past 13, losing you more money than your theoretical calculations would imply.

 

[qwertyuiop1]

1) Even money bets will lose money due to commissions

2) Volatility is massive around these announcements, so you may be stopped out even if you guess correctly.

3) Slippage will mean that your 13 point stop will be executed somewhere past 13, losing you more money than your theoretical calculations would imply.

Ok - informative answer the 52 aces,

 

[arabianights]

If you look back at my example, then at 80% chnace would push it from 10 points to 14 points - teh last point would then come on confirmation.

So - with a stop loss at 13 then it pays even money for a 1/4 shot.

Obviposuly my example was just used to illustrate muy theory.

Ok, well the probabilities are derived from the futures market which is the very thing you want to trade!

So for example say the probability is 80%. Your fictional instrument will be trading at 14 already. So on the 20% chance it goes down to 10, losing 4 points. On the 80% chance it goes to 15 and gains one point.

So your expectancy is 0.

 

[SuddenDeath]

Assumption = Assume = Ass U Me

1) Even money bets will lose money due to commissions

2) Volatility is massive around these announcements, so you may be stopped out even if you guess correctly.

3) Slippage will mean that your 13 point stop will be executed somewhere past 13, losing you more money than your theoretical calculations would imply.

beware of assumptions


How many psychiatrists does it take to change a light bulb? Answer: Only one, but the light bulb has to WANT to change.

 

[FXSCALPER2]

Is it easy to make a killing on betting just prior to big announcememts (E.g. Interets rate cuts etc.)

E.g. Lets say there is an 80 % chance of teh fed cutting by 25bps - and a 20% chance of a zero cut according to the markets.

That way - if something that is affected by fed cuts was trading at,say, 10 - and a 25bps cut would results in it going to 15 - and no cut means it stays at 10.
Therfore - presumably just before the cut,it would be priced at 14 given that the market will have factored in the 80% chance of a cut yes?

In which case you put a stop-loss at 13 - and get even money at a 1/4 shot.

(By teh way - I'm only completely speculating here with my theory)

SO - how easy is it for someone to do that literally just before teh fed announce their decision (That way being as least susceptible to noise as possible given teh short time frame)

IS this something that people do?

I'm a beginner at this game - so for all i know maybe everyman and his dog is at a similar strartegy - or perhaps for some reason unknown to me this strategy could never possibly work in practice.

Hence the question I guess.
Perhaps people use this on teh dollar,or gold perhaps?

In theory this can work but you need:

1- to avoid too much slippage of your stop at 13

2- the price has to go up more often than not after the news release on expected news

If the price goes to 14 before it gets to 13 more than 50% of the time and if your stop is not slipped a lot, it will work. You may think that is not too many 'ifs' to stop you. It is probabaly as good a method as any, which is not saying very much.

Having said that, why do you reckon guaranteed stop losses are at least 40 pips away?

 

[fibonelli]

One of the major SBs firms describes news trading as flipping a coin.

Trading is a business. If you're good at it, it's actually very boring.

If you want excitement, try Bungee jumping etc