Trading on the news difficult to attribute to some type of trade. This is not a technical trading method. – most indicators simply “break” at the time of price surges, with which news releases abound (from English. ease” – release), various candlestick patterns and patterns also do not shine with accuracy, because. depending on the bank's decision, or the report of the state. quotation services may fly away to 50-100, and in some cases more, points, in a few seconds! Probably, everyone who wants to make money on Forex at least once asked himself: “The couple passed in a minute more, than the previous week. There must be some way to make money from this?!”.
We hasten to please you – there are several ways! truth, not all of them are simple, absolutely everything needs attention (one wrong mouse movement, and you will become the owner of a bonus of two or three hundred gray hair) and the most important thing – on the news, most of all, an ordinary trader has to compete not only with other traders, but also with investment banks, hedge funds and other financial institutions, whose capabilities, to put it mildly, exceed the possibilities 99% traders!
News, what news?
Not all news is created equal and suitable for news trading! In its most general form, news can be divided into three categories:
1. Scheduled announcements of financial and industrial indicators (well-known Nonfarm Payrolls, Jobless Claims, Interest Rates, reports on stocks of crops and oil / gas and others), ie. news, where numbers are present – among professional traders they are often called Machine readable news – such news is most often traded using robots.
2. Scheduled news, which do not declare indicators – speeches by IMF heads, ECB, FRS and others, everyone understands, something important is happening, but most robots "sleep" during such news, because. there are no numbers here, which means – analysis is highly complicated, if at all possible! Also called “text releases”. However, and such news can and should be traded. how? Read on.
3. Force majeure situations. Natural disasters, military actions, plane crashes, trains, ships, generally, hacker attacks of federal resources – all important unpredictable events, having a direct or indirect impact on financial markets. American economist Nassim Taleb coined the term-name for such news – "black Swan". Such news cannot be predicted, it is almost impossible to predict the market reaction in the short term, generally – sheer danger to the nerves, robots and trading accounts!
Trading on the news
In terms of the article, list all the news trading methods I know, then describe each and give a subjective assessment of the pros and cons of each. so, let's get started!
Available for the average trader the way to trade on the news – three:
- Straddle trading (from English. to straddle – straddle)
- Trading on price bounces (tn. post-release trade)
At the moment, autoclick can be called one of the most popular ways of trading on news along with straddle trading.. Autoclick is a specialized software., receiving news as quickly as possible (Ideally – before, how the market will “react” with a price outlier) and clicking on the “Buy” or “Sell” button in the trader's trading terminal, depending on the correspondence of the actual value of the published news result to its forecast (I haven't spoken yet? Before each news, analysts from leading banks and rating agencies announce their expectations, which are then compiled to a single value – the so-called "analyst forecast"). In this way, if the amount of proven oil reserves is 20 million barrels higher than forecast, rest assured, jump on XTIUSD (when trading spot oil) will not keep you waiting!
Pros of autoclick:
- – Entering the position "before and towards the market" (from the description of the most popular autoclick service in the Russian Federation);
- – No dependence on the trading platform: you can use as a simple web platform, and Metatrader, or cool analytical terminal – the main thing, to have Buy and Sell buttons on the monitor!
- – Almost all autoclicks have the ability to adjust the amount of deviation (how big, and less), tn. "Triggers" (from English. trigger – trigger) when exceeded, a click is made. You can, in fact, select, what is the probability of a sharp movement and the risk you are suitable for each news;
Cons of autoclick:
- -Market entry is carried out by market orders: slippage is frequent and violent!
- – The vast majority of autoclicks have a monthly fee, sometimes very tangible (49-1300 dollars a month). On the Internet, we managed to find only one autoclick without a subscriber. fees and 2 free (truth, one of them has been closed for new users for a couple of years! No matter how I begged the owners of the service, they were adamant!)
- – The main problem with autoclicks – finding a suitable broker – is left, most often, for a trader to decide ... The owners of the most popular autoclick in the Russian Federation generally disconnect from the service without any questions at any mention of names by users, and not only on their websites! This is such a zero-tolerance (zero tolerance policy).
- – The need to be present at the computer before each news release.
- – Entrance competition: you should be faster. The one, who is slower – gets the worst entry price and / or loss. Financial companies sometimes spend hundreds of millions of dollars to get news a millionth of a second earlier., laying fiber optic cables along the optimal route, sometimes even punching mountain ranges for a couple of kilometers! Normal trader can only change the autoclick service, buy a server closer to your broker / exchange, yes use the fastest trading platform!
- – Impossibility to trade text releases due to lack of numbers.
Surely every trader has tried this technique.. What could be easier? You place two pending orders before the news, waiting for, news outburst “captures” one of the orders and flies up (or down), to yachts and villas ... Nevertheless, despite the abundance of advantages, straddle trading also requires careful analysis and adjustment. Forks are most often traded with the help of robot advisors. There are two types of such: some download the news calendar themselves, others need to specify the time before each release. Otherwise, both types are very similar.: they place orders a certain time before the news (you need to pay attention to the difference in time zones between your broker and the news source!) at a certain distance from the price (too much indent – lose profit, small – danger of triggering two orders at once and a very tangible loss or margin call). The open position is then followed by (where using a trailing stop loss, where using indicators) and eventually closes (sometimes at a profit).
- – The level of automation of some advisors is very high, up to full automation!
- – Ability to trade text releases, of which there are many!
- – There is no need for "full acceleration" and buying expensive equipment next to the servers of the exchange / broker, you can trade even from your home computer (if a, sure, you have it turned on 24\5).
- – There is no need for in-depth analysis of each news release for the correct selection of triggers, like autoclick.
- – Largely (I don't know, why) the “straddlist” community is much more loyal to the disclosure of the names of brokers and other information (some sites even keep statistics of trading results!).
- – When using pending stop orders – slippage will also appear, truth, everything will depend on the hardware of your broker.
- – When using limit orders, you will most likely not be executed (or will not be performed in full), which also, agree, not great.
- – If you do not quickly remove the second order, the price may start to “spike” and touch the second order as well ... Result, think, clear.
- – If your broker greatly widens the spread before the news – orders can still be hit.
- – If you do not have a fully automated Expert Advisor, you still have to before each release (or after the past) tune in to new news ...
If you have watched the price behavior during and after the news, you can often see, that the price does not immediately conquer new heights (or hollows), but it moves in jerks, impulses. Why is this happening? The fastest guys come in first, entering in huge volumes and sharply pushing the market to the side. Then there is a short-term “compromise” on the market, movement slows down, the spread between buyers and sellers is narrowing – this is the time the main "crowd" comes into play, pushing the price further and further (or the other way, this also often happens) in a few minutes, or even hours! Plus to this, some news releases (usually the most important to the economy, causing sharp, volatile movements) have the same properties, as well as gaps (price gaps), in particular one: they tend to "close", that is, to return to the price even before the news, especially, if the analysts' opinion strongly disagreed with the fact! So we can say, that the market returns at a fair price and in such cases. Where do post-release vendors come into play?? And everywhere! Most try to play on "closing the gap" or get up after the news in the "outgoing train", the most experienced trade inside the first candles, when the price is still moving in leaps and bounds, profit from kickbacks (not those, which you thought of! And partial refunds of the price in the opposite direction from the main), although I'll tell you straight, nerves for this need excellent…
- – No need to be in the "first wave", ie. fight for speed with banks and funds, how autoclick users do it.
- – With proper experience, you can trade news of all three types!
- – Easy to start concept works, difficult to master
- – Just start, it is not easy to become a pro)) – Training for endurance and managing your fear.
- – Automation if possible, it is extremely difficult – this is a manual strategy. – We need really steel eggs nerves, as well as (truth, not always) soccer goalkeeper reaction. Generally – such trade is not for everyone!
- – I only know one resource, directly specializing in this strategy – this is the Forex Peace Army forum thread – Diamond Trading Signals: http://www.forexpeacearmy.com/forex-forum/forex-news-gun/23015-introduction-forex-news-gun-diamonds-trading-signals.html – Nerves can be planted with this strategy faster than any scalping., especially if the price starts to "spike" against you.
What conclusions can be drawn from this article? Or even not so – what thought I wanted to convey to you? In a nutshell: free cheese in trade on the news, Unfortunately, not, despite the seeming risklessness and coolness from all sides, there are a lot of pitfalls and icebergs in news trading, which you can break your nose (or drain your trading account in a minute), such as: broker tricks, slippage, delays in trade orders and news itself, wrong trigger selection, eventually! You can only avoid the majority by gaining experience.. As with the vast majority of strategies for making money on Forex and other financial markets, there is only one piece of advice that can be given.: sample, analyze, trade, do not freak out! ))