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How do you trade news?

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  • First Post: Mar 25, 2006 9:36am Mar 25, 2006 9:36am
I know one of vegas rules is to not trade on big events. I want to discuss here the events that are near and their impact. What do you define big, and how much a news moves the market.
Looking to the last days of the week there where 2 reports
Old house sales in us wich was good, and the $ had a big move
New house sales in us wich was quite bad but didn't move the market as strong as the other.
Try hard, think fast, die young
Quoting dof
I know one of vegas rules is to not trade on big events. I want to discuss here the events that are near and their impact. What do you define big, and how much a news moves the market.
Looking to the last days of the week there where 2 reports
Old house sales in us wich was good, and the $ had a big move
New house sales in us wich was quite bad but didn't move the market as strong as the other.
Hi Dof,

The Calendar right here @ FF has them weighted by colour of the chart beside the News Release. Im not sure how those colours wer decided or by whom.

the attached is an xl sheet {old but maybe still usefull} The ratings are mine done by visual chart movement analysis.

I'm not sure Vegas has a Rule nNot to Trade on Big Events. I thought he said it may be the catylist to move it in your favour.

B
Attached File(s)
File Type: zip Ecc Reports.zip   37 KB | 2,863 downloads
Quoting dof
I know one of vegas rules is to not trade on big events. I want to discuss here the events that are near and their impact. What do you define big, and how much a news moves the market.
Looking to the last days of the week there where 2 reports
Old house sales in us wich was good, and the $ had a big move
New house sales in us wich was quite bad but didn't move the market as strong as the other.
I think if you asking, How to trade the News in the most literal sense, The way I do it is wait for the news to come out and while on a 5 minute chart, you can see the reaction to it. usually about 15 minutes past the news event. almost always price settles into a channel. That for me is the ideal time to set up a Channel breakout trade or some people call it a box trade. I usually do very well with that, because of the moment generated after the market makes up it's collective mind on direction. I set my price projections based on technicals and FIB numbers.

thanks SMJ
Quoting smjones
...That for me is the ideal time to set up a Channel breakout trade or some people call it a box trade. I usually do very well with that, because of the moment generated after the market makes up it's collective mind on direction. I set my price projections based on technicals and FIB numbers.

thanks SMJ
DITTO your remarks SMJ, well said. I go for the "Box Play/trade" myself and find it quite useful and consistently profitable on news days/breakouts on 5min charts looking at the close of the 15m candle after news for additional confirmation/trend.

Thom
Quoting accrete
DITTO your remarks SMJ, well said. I go for the "Box Play/trade" myself and find it quite useful and consistently profitable on news days/breakouts on 5min charts looking at the close of the 15m candle after news for additional confirmation/trend.

Thom
Hi Accrete,

The other nice thing about this trade is it makes an excellent hedge if it goes the opposite direction of my VWB 4 H trade, until thinks settle down.

SMJ
Quoting accrete
DITTO your remarks SMJ, well said. I go for the "Box Play/trade" myself and find it quite useful and consistently profitable on news days/breakouts on 5min charts looking at the close of the 15m candle after news for additional confirmation/trend.

Thom
Oh, I forgot to ask, how's living in paradise today?

The Oregon coast, Coos Bay, Yachats,
Astoria, Bandan by the Sea. Ya lucky B.

SMJ
Quoting smjones
I think if you asking, How to trade the News in the most literal sense, The way I do it is wait for the news to come out and while on a 5 minute chart, you can see the reaction to it. usually about 15 minutes past the news event. almost always price settles into a channel. That for me is the ideal time to set up a Channel breakout trade or some people call it a box trade. I usually do very well with that, because of the moment generated after the market makes up it's collective mind on direction. I set my price projections based on technicals and FIB numbers.

thanks SMJ
I have been trading like this for the last several weeks with excellent results, but I'm curious if this is a temporary phenomenon due to the indecision over the Feds future tightening agenda, or if it occurs consistently. Have you noticed if the news moves the $ market as much when the Fed is on the sidelines?

And Bemac, thats an awesome spreadsheet! Thanks!
Quoting Darkstar
I have been trading like this for the last several weeks with excellent results, but I'm curious if this is a temporary phenomenon due to the indecision over the Feds future tightening agenda, or if it occurs consistently. Have you noticed if the news moves the $ market as much when the Fed is on the sidelines?

And Bemac, thats an awesome spreadsheet! Thanks!
I have used these news style trades for over 2 years. The trade is always consistent . The trade setup that works the best is the big news that comes out at 8:30 EST When it is a hot news item. But no, it is not a local or new phenomenon. I have been doing it for a long time. It is usually good for 30 to 50 pips on the GBPUSD.

SMJ
Quoting Darkstar

And Bemac, thats an awesome spreadsheet! Thanks!
Thanks Darkstar,

It should be noted that I actually put that sheet together ~ 5 years ago when I was predominantly trading commodities and Indicies.

Therefore you may want to re-evaluate things like Treasury Auctions etc as to their effect on FX. Back then, they didn't have much of an influence on the price of beans

B
What is interesting to me about trading after news releases is, The whole reason I found this site in the first place, was because of the excellent news calendar I found here. I found the weighting of importance of news events to be right on. In fact I love the VWB methods, but I have made more pips from news trades that were generated from this calendar at this site, then the pips I have made from VWB. Probably that is not a fair comparison, because I have only had access to VWB since early February. The news calendar here is second to none.

Ok, ok my sermon is over.... SMJ
Guys, thanx for the replies. But something is not clear to me. Do you analyse the news, expect a certain reaction, or you just wait to see a reaction and you follow it?
I mean, do you preprair for the news, and in the moment of its release you allready know the what's going to happen and just wait on the 5min chart to find out the right moment?
I didn't payed much attention to news, but with some losses... the news got my attention.
Try hard, think fast, die young
Quoting dof
Guys, thanx for the replies. But something is not clear to me. Do you analyse the news, expect a certain reaction, or you just wait to see a reaction and you follow it?
I mean, do you preprair for the news, and in the moment of its release you allready know the what's going to happen and just wait on the 5min chart to find out the right moment?
I didn't payed much attention to news, but with some losses... the news got my attention.
I do not care what the actual news report has to say. All I do is make a trade based on the consensus of the trading participants. That is why I place my trade after the news comes out, when price consolidates temporarily.

see the attached chart of last Friday's cable.

Thanks SMJ
Quoting dof
Guys, thanx for the replies. But something is not clear to me. Do you analyse the news, expect a certain reaction, or you just wait to see a reaction and you follow it?
I mean, do you preprair for the news, and in the moment of its release you allready know the what's going to happen and just wait on the 5min chart to find out the right moment?
I didn't payed much attention to news, but with some losses... the news got my attention.
Sorry about that, I had to shrink the chart a bit. 600X600 rule

SMJ
Attached Image
Quoting smjones
I do not care what the actual news report has to say. All I do is make a trade based on the consensus of the trading participants. That is why I place my trade after the news comes out, when price consolidates temporarily.

see the attached chart of last Friday's cable.

Thanks SMJ
I see, so channel braking is more powerfull after an important use. I say that 'cause you can use that stragegy anytime you can apply it, not only after a news, rigth?
Try hard, think fast, die young
Quoting dof
I see, so channel braking is more powerfull after an important use. I say that 'cause you can use that stragegy anytime you can apply it, not only after a news, rigth?
Sure, a channel break is a standard tech signal, but I have found it is usually a slam dunk after a major news event.

SMJ
Quoting Bemac
Hi Dof,

The Calendar right here @ FF has them weighted by colour of the chart beside the News Release. Im not sure how those colours wer decided or by whom.

the attached is an xl sheet {old but maybe still usefull} The ratings are mine done by visual chart movement analysis.

I'm not sure Vegas has a Rule nNot to Trade on Big Events. I thought he said it may be the catylist to move it in your favour.

B
Thanx, great file. Nice work.
Try hard, think fast, die young
Quoting smjones
What is interesting to me about trading after news releases is, The whole reason I found this site in the first place, was because of the excellent news calendar I found here. I found the weighting of importance of news events to be right on. In fact I love the VWB methods, but I have made more pips from news trades that were generated from this calendar at this site, then the pips I have made from VWB. Probably that is not a fair comparison, because I have only had access to VWB since early February. The news calendar here is second to none.

Ok, ok my sermon is over.... SMJ
thanks for the kind words, made my day!

we have a good team behind the calendar volatility ratings. of course it is only given as a guide, not as an absolute, but it is nice to be able to glance at the calendar and quickly know what events are important enough to warrant futher research.
Relax and be happy.
Quoting Bemac
Hi Dof,

The Calendar right here @ FF has them weighted by colour of the chart beside the News Release. Im not sure how those colours wer decided or by whom.

the attached is an xl sheet {old but maybe still usefull} The ratings are mine done by visual chart movement analysis.

I'm not sure Vegas has a Rule nNot to Trade on Big Events. I thought he said it may be the catylist to move it in your favour.

B
great attachment bemac. one thing you are underestimating is the CPI, though. employement situation is important, and you have that covered, but CPI is even more important than employement. currency trading (on a fundamental level) is all about interest rates. two things drive interest rates: inflation and employement. back in the 70's, economists were all about employement. but we have learned since then, and now economic theory puts more weight on the inflation. bernanke's (and Trichet and the rest of the central bank heads) main focus is inflation, have a read of his book 'inflation targeting' and that will be ultra clear, and therefore the market's focus is on inflation. anyway, this is a long way of saying 'its all about the CPI'.
Relax and be happy.
Yeh But if you have inflation + unemployment = stagflation it will kill dollar
kiss the trend
Okay guys thanx again for the replies. One question more.
Wich pair is more affected by a news?
Let's take FOMC Interest Rate Statement coming on tuesday. Wich pair(s) should I watch? I know it will affect all the usd pairs, but watching on 5min charts all the usd pairs... it's a little hard for me. So, wich one will have the strongest move?
Try hard, think fast, die young
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