News Trading: How To Do It And What To Expect From It

Podcast: News Trading: How To Do It And What To Expect From It In This Video: 2:22 The Challenges With News Trading 3:05 Trade With Charts For Big Impact 6:05 Base Trades on Technical Analysis Let’s talk about news trading; how to do it and what to expect from it. So let’s talk about that more, right now. Hi Forex Traders, it’s Andrew Mitchem here, the Forex Trading Coach, and today is Friday, the 19th of June and in this video and podcast I want to talk about trading the news as a Forex trader. I get asked questions quite often about news trading, and although I am now a technical trader, I have traded the news in the past. I had another email came through here just this week from Seya, and Seya says, “Hi Andrew I am a big fan of yours and without fail I always listen to your weekly podcast and I read your daily news updates on your website. Can you talk about news trading i.e. the higher impact data events like the Fed rate decisions etc? So, the way I look at trading is this: as a technical trader I look at the charts. Yes, news affects how the charts develop and without a doubt we have to be aware of the higher impact news announcements, because that’s how the market moves. Sentiment changes on news announcements. Now, about eleven or twelve years ago when I started trading Forex, I used to trade the news quite often because back then, things were different and, like most things in life, times change. And back then I used to make a lot of money out of straddling things like the non-farm payrolls or non-farm employment change that it’s called today. And back then you could do that. You could put a buy stop on above the current price and a sell stop below the current price. And, as I’ve mentioned many times, and it is also in my book, I make around 12% on my first non-farm payroll news announcement by having a straddle. I had a ten grand account back then and I made about twelve hundred dollars in less than thirty seconds! Let’s say a buy stop got filled, as soon as I could delete the sell stop. I was in a big, frantic panic. I closed the buy stop out. I made 12 % on live account on my very first non-farm payroll. And I thought, wow this is so amazing, this is so easy! But back then you could do those type of things. The Challenges With News Trading But today, things have moved on. Brokers have made that a lot harder to do. You get price freezes during news announcements, you get big gaps, you get wide spreads before the announcement, you get spikes up and down. You just can’t straddle the news like you used to be able to do. You get other things. If you place an order in there you suddenly find there’s a big spike up, let’s say, and you get filled way up here whereas you asked to be filled down here, so you get those types of things happen. And really it makes it very hard to trade news as like a straddle trade. People do have things like they will wait for a news announcement and they’ll place a trade after that news, and that’s fine if you have a method that works. And of course there are news traders out there that make a lot of money out of trading. Trade With Charts For Big Impact But me as a technical trader, I much prefer to look at the charts because the charts, especially the longer timeframe charts, tell me where the news is likely to move the market. So I have a fairly good understanding of whether the news is likely to be better or worse than anticipated by what’s already been shown, several hours sometimes, several days sometimes, in advance of that news announcement actually happening. So this is how I look at news trading. Now, as a technical trader (not a fundamental trader), if I am trading 4-hour charts and higher than that, so 6-hour charts or daily charts, whatever it might be,