Trading During News:
The Forces of Demand and Supply Move the markets and the Forex Market is No different, the Price at any point in time for any currency pair reflects the Equilibrium between Demand and Supply.
Now Demand and Supply are of two Kinds, Real and Speculative.
If I want to Buy a House in the U.K. and have to pay for that in GBP, and If I do not have any GBP, I will have to Buy the GBP by Selling the Currency I have in order to buy the house. This is Real Demand.
If I believe that the GBP is going to rise against the US$, and I buy GBP by Selling the US$ through a margin account. This is Speculative Demand.
The Sum total of Speculative and Real Demand determines the Price of any Currency Pair.
The Daily Movements we See in the FOREX market is caused by Speculators trying to predict which way the price is going.
Now the Speculators determine where the Price is going based on 2 setups, Fundamental and Price History (a.k.a. Technical ) analysis.
The Fundamental traders Look at reports which are released at particular times to gauge the health of an Economy
There are hundreds of such fundamental reports every month, but most of them are a waste of time. There are about 30-50 of such reports that are capable of moving the forex market by 30 pips to 120 pips in the first hour of the report, if certain conditions are met. This is what I concentrate on.
I divide the Reports into two:
a) Interest Rate related,
b) Health of the Economy related.
There are 100s of Fundamental news setups available, here are a Few:
1) Spike Trading
Spike Trading is perhaps the Most profitable kind of setups available, using Spike trading I would Increase my account by about 100% every Month. I yet trade the Spikes but to trade spikes you need tools to get you in the market before the spike happens, the tools cost about $200 to $500 PM . However Most of the Liquidity dries up during News so even with a $500 auto clicker, its extremely Difficult to get into the market.
The Concept of Spike trading is simple:
Look at a Report to be released, say Retail Sales out of USA
Look at the Conciseness of the Economists .
If Actual Retail > Economist Prediction = Good for US$ so Buy US$
If Actual Retail < Economist Prediction = Bad for US$ so Sell the US$.
Pro: Easiest way to make money, if you can Enter the market.
Cons: IF YOU CAN ENTER THE MARKET ;-) most brokers will not fill you in , unless you have an Institutional quality feed which cost upwards of $100,000 Per Year.
2) Pre News Trading. -Fundamental
There are some reports where my own Research tells me that the Concenses is Incorrect, this I get a feal of when I look at whats happening in the market.
e.g. I had predicted the Australian Retail sales to be much higher than expected, getting in the market 1 Mint before the report.
3) Pre News -Technical
Looking at the charts I establish if we are in a Down Trend or an Up trend, and I do not care of the #s , what ever the #s I feel the Trend would continue.
4) Post News – Continuation
After the Report comes out and lets say it’s a Buy on USD/JPY , I wait for the Spike + Retrace and get into to market hoping for the next wave Up.
5) Post News – Reversal
After the news is out I try to catch the bottom or the Top of the move with the understanding that the trend will reverse.
6) False Move Reversal
At times the market does not move the way it should , and I feel that’s bcoz the Big dogs are trying to shake the small players out, I try to Exhaust their false move get in on an extrme and ride the wave to the correct side….
Man This is tiring, I have more than 10 more setups but I am too tired to write about it now, if you want join my Google group free of charge and I may when I am less tired share with my members other news trades, or discuss with them as a trade potential or a trade Review.
The Forces of Demand and Supply Move the markets and the Forex Market is No different, the Price at any point in time for any currency pair reflects the Equilibrium between Demand and Supply.
Now Demand and Supply are of two Kinds, Real and Speculative.
If I want to Buy a House in the U.K. and have to pay for that in GBP, and If I do not have any GBP, I will have to Buy the GBP by Selling the Currency I have in order to buy the house. This is Real Demand.
If I believe that the GBP is going to rise against the US$, and I buy GBP by Selling the US$ through a margin account. This is Speculative Demand.
The Sum total of Speculative and Real Demand determines the Price of any Currency Pair.
The Daily Movements we See in the FOREX market is caused by Speculators trying to predict which way the price is going.
Now the Speculators determine where the Price is going based on 2 setups, Fundamental and Price History (a.k.a. Technical ) analysis.
The Fundamental traders Look at reports which are released at particular times to gauge the health of an Economy
There are hundreds of such fundamental reports every month, but most of them are a waste of time. There are about 30-50 of such reports that are capable of moving the forex market by 30 pips to 120 pips in the first hour of the report, if certain conditions are met. This is what I concentrate on.
I divide the Reports into two:
a) Interest Rate related,
b) Health of the Economy related.
There are 100s of Fundamental news setups available, here are a Few:
1) Spike Trading
Spike Trading is perhaps the Most profitable kind of setups available, using Spike trading I would Increase my account by about 100% every Month. I yet trade the Spikes but to trade spikes you need tools to get you in the market before the spike happens, the tools cost about $200 to $500 PM . However Most of the Liquidity dries up during News so even with a $500 auto clicker, its extremely Difficult to get into the market.
The Concept of Spike trading is simple:
Look at a Report to be released, say Retail Sales out of USA
Look at the Conciseness of the Economists .
If Actual Retail > Economist Prediction = Good for US$ so Buy US$
If Actual Retail < Economist Prediction = Bad for US$ so Sell the US$.
Pro: Easiest way to make money, if you can Enter the market.
Cons: IF YOU CAN ENTER THE MARKET ;-) most brokers will not fill you in , unless you have an Institutional quality feed which cost upwards of $100,000 Per Year.
2) Pre News Trading. -Fundamental
There are some reports where my own Research tells me that the Concenses is Incorrect, this I get a feal of when I look at whats happening in the market.
e.g. I had predicted the Australian Retail sales to be much higher than expected, getting in the market 1 Mint before the report.
3) Pre News -Technical
Looking at the charts I establish if we are in a Down Trend or an Up trend, and I do not care of the #s , what ever the #s I feel the Trend would continue.
4) Post News – Continuation
After the Report comes out and lets say it’s a Buy on USD/JPY , I wait for the Spike + Retrace and get into to market hoping for the next wave Up.
5) Post News – Reversal
After the news is out I try to catch the bottom or the Top of the move with the understanding that the trend will reverse.
6) False Move Reversal
At times the market does not move the way it should , and I feel that’s bcoz the Big dogs are trying to shake the small players out, I try to Exhaust their false move get in on an extrme and ride the wave to the correct side….
Man This is tiring, I have more than 10 more setups but I am too tired to write about it now, if you want join my Google group free of charge and I may when I am less tired share with my members other news trades, or discuss with them as a trade potential or a trade Review.