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[fxallien]

Can someone explain us how to trade news ?

[jgerousis]

Actually Trading the news is not as easy as some people may think. The market does not always react to the news the way it should. Look at these:

NEWS: came out to favor the dollar. Dollar Rises, because traders did not expect that.


NEWS: came out to favor the dollar. Nothing happens! Because traders expected that.

NEWS: came out to favor the dollar. Dollar falls sharply. The news although favored the dollar yet they were short of their expectations. So dollar falls.

So as you can see, the effect of the news is very highly uncertain. Even though you could expect what the news would be, yet the outcome is very uncertain.

In order to trade such situation you may use three methods:

1. Breakout method. By setting opposite orders, like away 30 pips from the price before news, and wait for one to be triggered regardless of the outcome of the news. But be careful to follow with trailing SL quickly, as triggering could be a spike and could retrace back. (happens a lot during NFP)

2. Trend. Wait for the trend to form. Go with the trend. Follow with trailing
SL.

3. Scalping, as soon as you see the market moves. Buy or sell according to direction, lock some pips, and get out. or you could follow with trailing SL.

Regards
Yanni
http://www.myfxreport.com

[Ek0]

-Has the market priced in the expectations for the news release yet?
You need to confirm this. If it has factored in the news then if it comes out as expected you probably will see no movement.

-Where is price at and where is the bias for the news?
For example : What does a weaker dollar mean for the pair you plan to trade for the news release?

I pick and choose the news that I trade. I will typically set entry triggers with pips dependant on price at that moment and what I consider to be a valid entry point for a suprise in the news.

I consider news movements to be COMPLETELY finished within 90 minutes of the news release. Typically I am out of news trades within 45 minutes.

Entry triggers can be risky. To avoid risk, watch the news release, if there is a suprised wait for a pull back after the initial spike. Enter, and when it gains, exit.

Waiting for the pull back is the safest way to trade after the news spike is the best way to trade I believe.

DONT ENTER TRADES BEFORE NEWS RELEASES. DONT ENTER TRADES WHEN THERE IS NO SUPRISE UNLESS YOU HAVE OTHER REASONS BESIDES THE NEWS.

For example : Yen weakens as expected, so you reenter carry trade position or something.