Trade Forex Market News

[joenews]

December 20, 2012

Live chat room trade was Canadian CPI data.
Market was expecting 0.1%
we were using a trigger of 0.5%
actual number released was 0.2%.

This was not a big surprise to the market however it was less than expected and less than the prior month's reading of 0.3%.

Our chat room call was a (HOLD) and no trade-off of the news itself

The initial reaction off the news was a spike up in the USD/CAD.

We waited approximately 4 minutes and then SOLD this pair which was basically a fade off of the spike up in price.

This trade resulted in a 30 pip profit.

We also opened a BUY order on Oil and used the commodity rally as additional confirmation to our USD/CAD (SELL) trade.




December 21, 2012

Live chat room trade was US existing home sales.
Market was expecting 5,040,000
we were using a trigger of 30,000
actual number released was 4,420,000

This was certainly a big difference from what the market was expecting and it did hit our trigger number. However in our analysis and update prior to the economic data released, we anticipated a higher probability of a market surprise for this number due to the national Association of realtors report of grossly overestimating their figures over the past couple of years.

We knew there was going to be a substantial reassessment of all of the prior news releases from the national Association of realtors and there would need to be some serious downward revisions.

Our chat room call was a (SELL) immediately upon confirming the news.

This trade resulted in approximately 19 pips within just a few minutes after the news was released and we took the profits that were available up to that moment.


December 22, 2012

Live chat room trade was US GDP.
Market was expecting 2.0%
we were using a trigger number of 0.5%
actual number released was 1.8%

This was not a big difference from what the market was expecting however it was a disappointing number. At the same time US GDP data was released, we also received the weekly jobless claims which were better than expected and continued to show improvements in this area. This gave a mixed reading and since the US GDP did not hit our trigger number,

Our chat room call was a (HOLD) and no trade off the news itself.

Due to the lack of technical setups, we did not call a trade after the news.
We will not be trading the rest of December 22 and we will be off on Friday, December 23 due to a lack of holiday trading volume.

 

[joenews]

Since this week is considered as one of the slowest trading weeks of the year (end of year and New Years holiday) I will take some time to outline a few strategies we use for trading the news with currencies.

Below is a recent post on our site:

Trading economic data

In this article I will focus on trading economic data using currencies in the FX market.

There are a few hard and fast rules you must know before trading the news if you are new.
First of all, expect a great deal of volatility and prepare yourself for the possibility of financial loss.
However there are strategies for preventing losses and it is very possible to successfully trade the news with hardly a losing trade.

It will first of all, involve understanding the impact of economic data to the currency you are going to trade. This will take some practice and I strongly recommend using a demo account but please remember that a demo account may perform differently than a live account even though brokers may tell you otherwise.

There are times when economic data is released and it surprises the market because the actual numbers that are released deviate far from the expected numbers analysts and economists were expecting.
Occasionally, even though the headline economic data may actually hit a trigger number that will signal either a buy or sell trade, price may still not move in the direction you expected.

When this happens, it is either that you have miscalculated or misunderstood the data or perhaps there were subcategories within the report that altered the actual outcome and possibly previous releases of the same data. For example, if the market is waiting for the release of the weekly US job claims numbers and it is widely expected that the number of individuals seeking unemployment insurance is 350,000 and the actual number is 250,000. At first this could be an indication that there is some improvement however deeper into the report are the revisions and it shows that the prior week's numbers were actually much higher than previously reported. This could potentially cancel the positive headline number and show a possible trend in an increasing number of individuals seeking unemployment insurance.

The reaction, would most likely be a spike in one direction on whatever currency you are trading that is sensitive to US economic data and then, possibly a reversal.

This spike and reversal points to a great deal of volatility and the possibility of loss. Here is where you need to anticipate problems.
One of your adversaries in trading the news is possibly your broker.
Since many brokers will use the times that news is released as an opportunity to take advantage of the inexperienced, you must be aware of some of the tactics brokers use.

Freezing price feeds or issuing re-quotes during news events will often times frustrate a new trader.
Entering a trade order with a pre-selected stop loss is also often times a big mistake and an opportunity for brokers to clean up. Meaning that by entering a stop loss order, they will obviously see where the order is placed and if at all possible, they will hunt stop loss levels and hit them.

Most experienced/successful news traders will use at least a 100 pip mental stop loss
Please understand that this does not mean you should always use a 100 pip stop loss!
It is simply the understanding that when you trade on a news event, you should expect volatility and also the possibility of unfair practices by your broker.

Since most news traders are using a 100 pip mental stop loss, they do not over expose their trading account by putting too much money on one particular trade.
They will reduce the amount of capital placed on a trade which would incorporate the possibility of getting stopped out by 100 pips. This would not wipe out their trading account. It is important to factor potential losses and two determine the proper lot size or margin/leverage used.

Again please understand that I am not stating that every trading opportunity should require a 100 pip stop loss There are obviously times when clear support and resistance levels will continue to hold even during times of extreme volatility and these levels can be used as potential stop loss placements as well. Often times these support and resistance levels will be much less than 100 pips difference from the entry price.

Only experience and practice will give you the understanding you need to determine if there is a need for a 100 pip stop loss or not.


Another rule that is considered one of the top three, is to have a strong respect for the market.
This means that if you ever find yourself in a trading situation that you do not understand, walk away!
There is simply no excuse for throwing real money into a trade when you are not certain of what you're doing. You can practice and act reckless all you want with a demo account but you should never do it with real money.

If a news release confuses you or something doesn't seem right such as how price is behaving on the chart compared to the economic data, do not place the trade or wait until you have had sufficient time to determine what is causing the reaction of traders in price.

Simply put, there will always be another trading opportunity. On the average, there is economic data available almost every trading day of the week throughout each of the trading sessions from the Asian, the London and New York session.


Finally, understand that the ultimate goal is to create a trading plan that you can duplicate day after day. Your job is to become a student of the market and realize that your education will be endless.
Even after many years of trading, I'm always learning something new and I expect this will continue for the next 20 or 30 years of my trading career.


News Daddy
Trade Forex Market News.

 

[pboyles]

Pretty amazing that your website can announce those figures a year in advance. Where do I sign up?

 

[joenews]

pboyles...
Not sure what you are referring to,
the numbers in the article just above your comment were an example to help explain reactions to the news. The numbers in the December 21 and 22 were the outcome of news and reaction.

N.D.

 

[Trader333]

It is still 2011 and not 2012 as you had stated in your post which is why he was praising you on predictions a year before they have happened.

Mind you if those who believe in the Mayan calander are correct there will be no 22nd December 2012 to make any predictions about because the world will end on 21st December 2012


Paul

 

[joenews]

haha... thanks for pointing that out! My mistake, should read 2011.