Generally during NFP & FOMC Events , XXX USD & USD XXX pairs starts trending up/down crazily for huge amount of PIPS depending on NFP(Non Form Payroll) US Employment data (or) for FOMC: Fed Dovish /Hawkish stance on US Economy + QE Taper/More QE (QE1,QE2 & QE3) + USD Rates Increase etc..
To start with there are 3 options at disposal for us :
- Shut your PC, am not gonna trade and outguess these data ==>(stay away from this high impact news NFP/FOMC )
- Use Commercial news trading software like :
- Oracle Trader
- NFP Pilot
- Use a very simple strategy which I have used time and again proven to be successful (read below)
Simple Strategy :
As a trader we are aware let it be NFP (or) FOMC news , the impact it creates on USD is phenomenal ,So how we do get our share of PIPS by trading it smartly??
I have tried this approach many number of times , as there is not much risk involved and have grabbed decent amount of PIPS every time depending on the nature of move we have based on this news.
Before the event, say 7min ago : Take in all 6 trades in SAME Direction /SAME Volume & keep the pending orders 2x times the initial volume at 30 pip distance
For Example :
Entry :
3pairs from XXX USD Universe :
Buy 0.1 EUR USD 1.3411
BUY 0.1 GBP USD 1.6952
BUY 0.1 AUD USD 0.9391
3pairs from USD XXX Universe :
BUY 0.1 USD JPY 102.08
BUY 0.1 USD CAD 1.0852
BUY 0.1 USD CHF 0.9117
set 6 pending orders 30pips distance 2x times the above ones i.e :
SELL 0.2 EUR USD 1.3381
SELL 0.2 GBP USD 1.6922
SELL 0.2 AUD USD 0.9361
SELL 0.2 USD JPY 101.78
SELL 0.2 USD CAD 1.0822
SELL 0.2 USD CHF 0.9087
Exit :
I generally close all the trades at one go after the pending trades for min 3 pairs gets activated out of 6 and have decent $$ profit to take home
Why this strategy works and good to make an EA to test out too :
NFP/FOMC events generally have a theme to make USD strong /weak, that creates trending opportunities if assume the data created USD positive sentiment:
out of our 6 trades USD XXX Universe group (3 pairs) will do well and we have to worry about the XXX USD Universe . Pending sell orders for XXX USD pairs Universe will get activated to limit any damage and make profits on downside + plus we have 3 USD XXX pairs doing well + voila we have limited damage on XXX USD pairs there you go we make some amount of profits depending on the move.
To automate this strategy for EA Coders, here's my thoughts :
i) EA should place both BUY 6 pairs( 3 USD XXX & 3 XXX USD pairs) along with SELL 6 pairs ( 3 USD XXX & 3 XXX USD pairs) at the same time/volume "x" if no orders of those pairs exist
ii) pending orders for all open trades with 2x volumes awaiting at 30pips distance
iii) Basket order mechanism to poll all the open orders total profit matching the user set ProfitTarget Dollars and close them at one go.
I have used this mechanism over many Fed FOMC & NFP events and proven to be successful doing it manual, any comments/tweakings welcome.
Cheers,
Scoobi