Trading Knee Jerk Reaction To News

[IAydelman]

Hi all,

(This is for intraday)
Just wanted to get an opinion on a certain type of trade. Normally I am a trader who looks for high probability set ups, rarely going for aggressive breakouts, and instead patiently waiting for retracements to solid levels. However in the last month or so i had great luck trading knee jerk reaction to data releases/news/central bank speeches, basically just going with price action.

But today i was reminded that nothing in trading is a sure thing, did the exact same set up, going with price when it suddenly spiked 5 or so ticks in the opposite direction, i had erased almost the entirety of my week's gains in a flash. I got out, and watched the eur/usd keep going my way for another 20 or so ticks which was infuriating.

Does anyone trade this way? Any tips? Good as a strategy over the long term or will it end up eating my bottom line?

Also note i dont trade all news breakouts, i like to see a smooth movement of prices, if theres an erratic spike or prices dont know what direction they want, then i stay out.

 

[DaxSlut]

going with price when it suddenly spiked 5 or so ticks in the opposite direction, i had erased almost the entirety of my week's gains in a flash.

5 pips to wipe out of week of gains ?
You need to rethink your leverage

I got out, and watched the eur/usd keep going my way for another 20 or so ticks which was infuriating.

This happens everyday, don't have any regrets or your frustration will lead to oppose your original trade and lead to even bigger losses.

I have no regrets for the following trades including the losses

Perfect entry - DAX long 9311 at £20pp .... It sat there for half an hour doingnothing whilst I was in the shower. Closed for £100 profit. If I held I would have been £8000 in profit by the end of the sessions instead of being £2500 out of pocket for venting with said frustration and trying to short my original trade

Perfect entry - DAX long 10311 at £40pp .... I was shorting the DAX (£10pp) when the market spiked against me and I closed quickly ~ £340 loss. I carefully watched the DAX spike to 10350 and recoil down to 10300 ish. Spanked my £40pp long as my confidence was sky high that this was the start of the rally instead settled to win back my loss which yielded £400 in a minute and closed DAX never returned to 10311 and ended the day 400 points higher. 400*40 = I'll let you do the math

No regrets sir ..... no regrets whatsoever. I just chuckle that I still have a pot and am trading

 

[IAydelman]

5 pips to wipe out of week of gains ?
You need to rethink your leverage

Yes, stupidly doubled my leverage for that one trade. Thinking back i think that was my downfall. I was spooked much more easily as i know the stakes were higher. I only post this thread because tomorrow there will be data and on friday there is NFP data, and my confidence in trading news has just been shaken! But tomorrows a new day.. Should be over it after some sleep.

Also, I have been looking to trade the DAX, what a high stakes product right there. My firm will only allow experienced guys to trade it live with decent leverage though, so i have been forced to try it on sims, but i have enjoyed it. I can wholeheartedly understand their DAX policy too hah. I've traded it using fundamentals and pivot points for entry and target almost exclusively and ive been successful more than not. (Though i did have one horrid string of losses on a choppy day)

IA

 

[options-george]

Yes, stupidly doubled my leverage for that one trade. Thinking back i think that was my downfall. I was spooked much more easily as i know the stakes were higher. I only post this thread because tomorrow there will be data and on friday there is NFP data, and my confidence in trading news has just been shaken! But tomorrows a new day.. Should be over it after some sleep.

Also, I have been looking to trade the DAX, what a high stakes product right there. My firm will only allow experienced guys to trade it live with decent leverage though, so i have been forced to try it on sims, but i have enjoyed it. I can wholeheartedly understand their DAX policy too hah. I've traded it using fundamentals and pivot points for entry and target almost exclusively and ive been successful more than not. (Though i did have one horrid string of losses on a choppy day)

IA

Hey IAydelman
Hope your doing well.
Re DAX - some of the other guys on the forum pointed out that there is now a mini-DAX contract - which is 5E a tick instead of 25E for the main contract. Though volumes still seem to be low on it and spreads a bit higher. Maybe bring this to attention of your risk manager.

In terms of EURUSD, are you also trading that using futures, or were you doing spot?

I am looking to add a 3rd product to my combination of ES and TY and wouldn't mind going for something currency-related.

Now, how about that coffee? (am back in London now).

 

[IAydelman]

Hey IAydelman
Hope your doing well.
Re DAX - some of the other guys on the forum pointed out that there is now a mini-DAX contract - which is 5E a tick instead of 25E for the main contract. Though volumes still seem to be low on it and spreads a bit higher. Maybe bring this to attention of your risk manager.

In terms of EURUSD, are you also trading that using futures, or were you doing spot?

I am looking to add a 3rd product to my combination of ES and TY and wouldn't mind going for something currency-related.

Now, how about that coffee? (am back in London now).

Welcome back! Im sure you missed the weather haha. Regarding the mini contract, one of the managers is trading it himself right now to see how it trades, low liquidity is a worry for them.

We trade currencies as futures contracts. Cable may be a nice addition to your currency arsenal, i trade it exclusively off data, with pretty good success. It les liquid than euro and a little more volatile.

As for coffee, sounds great! Just let me know, tomorrow may be a bit tight with the NFP data.

IA

 

[options-george]

Welcome back! Im sure you missed the weather haha. Regarding the mini contract, one of the managers is trading it himself right now to see how it trades, low liquidity is a worry for them.

We trade currencies as futures contracts. Cable may be a nice addition to your currency arsenal, i trade it exclusively off data, with pretty good success. It les liquid than euro and a little more volatile.

As for coffee, sounds great! Just let me know, tomorrow may be a bit tight with the NFP data.

IA

on what exchange do you trade the currency futures?
I need to choose futures that are offered by CME, because that's who we have currently partnered up with.
I have seen some currency futures on the CME listing - but they are just called "Euro" or "British Pound" or "Japanese Yen" so I am a little confused.

 

[gfrost]

5 pips to wipe out of week of gains ?
You need to rethink your leverage



This happens everyday, don't have any regrets or your frustration will lead to oppose your original trade and lead to even bigger losses.

I have no regrets for the following trades including the losses

Perfect entry - DAX long 9311 at £20pp .... It sat there for half an hour doingnothing whilst I was in the shower. Closed for £100 profit. If I held I would have been £8000 in profit by the end of the sessions instead of being £2500 out of pocket for venting with said frustration and trying to short my original trade

Perfect entry - DAX long 10311 at £40pp .... I was shorting the DAX (£10pp) when the market spiked against me and I closed quickly ~ £340 loss. I carefully watched the DAX spike to 10350 and recoil down to 10300 ish. Spanked my £40pp long as my confidence was sky high that this was the start of the rally instead settled to win back my loss which yielded £400 in a minute and closed DAX never returned to 10311 and ended the day 400 points higher. 400*40 = I'll let you do the math

No regrets sir ..... no regrets whatsoever. I just chuckle that I still have a pot and am trading

What a refreshingly honest post !

I think that if you can keep a level head and "reset" yourself after every trade you are on the way to being a better trader, it is so hard not to revenge trade and try to "get your money back"
Look at the way professional sportsmen seem to do this with ease when they must be massively frustrated.

I must agree with Dax, 5 pips to wipe out a weeks gains is massive leverage.

 

[IAydelman]

on what exchange do you trade the currency futures?
I need to choose futures that are offered by CME, because that's who we have currently partnered up with.
I have seen some currency futures on the CME listing - but they are just called "Euro" or "British Pound" or "Japanese Yen" so I am a little confused.

Hey George, we trade them on CME Globex as currency pairs, so i would imagine you should be able to find them...We also trade Eurex.

 

[IAydelman]

What a refreshingly honest post !

I think that if you can keep a level head and "reset" yourself after every trade you are on the way to being a better trader, it is so hard not to revenge trade and try to "get your money back"
Look at the way professional sportsmen seem to do this with ease when they must be massively frustrated.

I must agree with Dax, 5 pips to wipe out a weeks gains is massive leverage.

Thanks, i learned my lesson haha. Tried it again today with a normal amount of leverage and i went well. So hopefully, i have learned and improved. And yes, the leverage was very dumb of me, its one of those things that i cant even defend in hindsight.

 

[options-george]

Hey George, we trade them on CME Globex as currency pairs, so i would imagine you should be able to find them...We also trade Eurex.

OK thanks. I will check it the list of available products.

Much appreciated for sharing.

 

[ujeno]

Hi all,

(This is for intraday)
Just wanted to get an opinion on a certain type of trade. Normally I am a trader who looks for high probability set ups, rarely going for aggressive breakouts, and instead patiently waiting for retracements to solid levels. However in the last month or so i had great luck trading knee jerk reaction to data releases/news/central bank speeches, basically just going with price action.

But today i was reminded that nothing in trading is a sure thing, did the exact same set up, going with price when it suddenly spiked 5 or so ticks in the opposite direction, i had erased almost the entirety of my week's gains in a flash. I got out, and watched the eur/usd keep going my way for another 20 or so ticks which was infuriating.

Does anyone trade this way? Any tips? Good as a strategy over the long term or will it end up eating my bottom line?

Also note i dont trade all news breakouts, i like to see a smooth movement of prices, if theres an erratic spike or prices dont know what direction they want, then i stay out.

How do you access your news? I wouldn't bother trading news especially if you get it delayed.

 

[tomorton]

I haven't traded news as such - NFPR, bank rates, Fed Chairman speeches etc. but I did have fun long ago trading results announcements AFTER the market had reacted to them when they came out. It was either very quick easy gains or rather slow grinding losses, so possibly not a wash-out.

I wouldn't go in before the announcement but have you tried a bracket trade using orders, so you catch the move whichever way it goes?

 

[Bradtex]

I have seen some good systems developed solely around news announcements, however, they did require excellent latency and hardware cost was quite high for average retail trader.