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Best Way to Trade News?

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  • First Post: Nov 20, 2006 9:23pm Nov 20, 2006 9:23pm
Ive been watching the FX market for about 8 months now and I was a pretty dismal trader in the beginning. For the most part what I did was look at other people tech analysis and tried to find situations where I saw a few people in agreement. I managed to lose my entire account trading like this, basically copying other peoples trades and then I started trading news releases instead.

I have found this so far to be a much more effective strategy. I basically scalp small amounts of points and then just use larger lot sizes to make up for the difference.

But there seems to be some conflict between the way I trade the news and the way most others do. I have seen people refer to the method i use as "straddling." I wait for the big releases and then put buy and sell stop orders 5 points in both directions the second the data is released.

This has been the method that has worked best for me but when I started making higher gains with it, the company I use sent me an email saying that they were switching my account to a no dealing desk option and that i didnt have any choice about it. they have suggested that it is in the news traders best interest to do this, but i find this extremely hard to believe.

The account was just changed last Friday so I have not had a chance to try it out but I am curious if anyone else has any perspective on whether or not the no dealing desk option is a better way to trade the news.

Mostly what I am worried about is the slippage issue. I have had almost perfect execution in the past but now my company is telling me there are no guarantees against slippage. And when you are only looking to scalp a small number of points, a few instances of slippage could be detrimental to a traders account.

I expect that there will be responses that suggest it is better to wait for the dust to settle after data is released. But I have heard this before and I just dont buy it. I think those initial price spikes are the highest probability trades, because the direction is clear for that moment.

Too many times I have seen positive numbers released, only to see the currency close lower on the day than before the data came out. I dont think it makes sense to try to predict what the market is going to do in a given situation. Id rather just play the news releases themselves and then get out.

But as far as i can tell (and granted i havent actually watched what happens without the dealing desk) it seems as though my initial strategy is obsolete or unusable. anyone disagree?
Hi,
Sound like they're on to ya - which brokerage do you use anyway?

I'm sure you realize that they are the counter-party to your trade, right? No offense intended but that is the reality. Most market makers hold the paper on trades, that is to say they sum up all the 'buy' positions and they sum up all the 'sell' positions of thier clients and then only buy or sell from the interbank market what they need to cover thier obligations. Reallly most market makers are basically cash poor when it comes down to it.

But that works for them because they know that the odds are that most of thier clients are going to get stopped out or are just plain wrong about the direction of the market. That being said the no-desk deal is all about the computer being able to react faster to your straddle trade and the inherent spikes in whatever direction the news or the revision of that news takes the market.

I've tried to straddle the news too, but even if your totally right those revisions to the news can get you stopped out in both directions! For me I try to wait a couple of candles and then pull the trigger. Sure I miss a few pips there but it is far less than what I have lost by trying to straddle.
{Link removed }
Let me guess who your broker was! hmmmmmmmmmmmmm, FXCM?



Sma
try currency futures

no counter party on your trade

and a lot cheaper than any of this blood-sucking brokers

I did change 1 year ago

no regrets whatsoever

I straddle the news with confidence
Peace
Quoting feb2865
try currency futures

no counter party on your trade

and a lot cheaper than any of this blood-sucking brokers

I did change 1 year ago

no regrets whatsoever

I straddle the news with confidence
I have been looking into currency futures for news trading as well as my position trading, which broker do you find useful? I was thinking Interactive Brokers, though really dont like the platform. You have a suggestion?

Thanks
The market is my nation. Traders, my family. Hello, brothers and sisters!
Are you trading red or yellow or orange news events? I find that you should limit yer strats to only red news events(even those dont always move heavily). If so, to avoid getting whipsaw place tp around 50 pips from price (locking u in for 30 profit) if you have sl set at anything less then 20 pips.
5 pips just sounds wrong seeing how price jumps around like hooker in heat on friday night.....right as news is coming out due to strats.
I'm not sure about this but it seems to work for me......i use bigger lots+less trades=more time to spend the money.
As far as other trading goes........i have to agree with you that it is very very hard. I just got stopped out on the gbp/us, lost pretty much 1/3 of my account!!!! It hurt like hell, forcing me to seriously contemplate paying for lessons(finding easier way to trade). Either way i learned lesson!

If you have problems with your broker, why wouldnt you get 2 brokers and strat trades with 2 brokers same time? good luck none the less!!!!!
I find setting up an entry order at least 1/2 hour prior to news with at least a 15 point straddle to avoid most stops and a limit of 20 to 25 points TP. You have to watch closely and adjust straddle to balance if needed



Quoting NewstraderFX
Straddling is mostly a dissaster-works very rarely. Most times you will lose-

I think one of the best ways to trade during the news is with fxbootcamp-I heard he got thrown off of here, but really, it's very good.
I find that if you trade the red events and u set ur TP and SL you normally come out fine. The exception to this is NFP. I am convinced that trader NFP requires darn good broker (nieve one at least) or luck to not get slipped massively on entry.

So you should trade the red events bar NFP.
Quoting feb2865
try currency futures

no counter party on your trade

and a lot cheaper than any of this blood-sucking brokers

I did change 1 year ago

no regrets whatsoever

I straddle the news with confidence
I Agree with Feb 100%

since I started using currency futures my problems with slippage, huge increase in spread on news re-quoting etc has gone for good.

I also straddle news
Quoting nomoretoxic
I Agree with Feb 100%

since I started using currency futures my problems with slippage, huge increase in spread on news re-quoting etc has gone for good.

I also straddle news
What futures do you trade 6E? By the way, today i had a look at 6B(GBP/USD) futures just prior to Durable goods and the spread went to 15 ticks. So, what futures do you trade and what was the biggest spread you've seen?
Guys with futures trading, casn you provide us with some resources? whose your broker? charts? any other pertinent info.

Thanks,
Sma
Quoting Yigal
What futures do you trade 6E? By the way, today i had a look at 6B(GBP/USD) futures just prior to Durable goods and the spread went to 15 ticks. So, what futures do you trade and what was the biggest spread you've seen?
What spread you're talking about??

in currency futures, you're not charged by spread. You have a fix commision between 3-6 dollars...that's it
You must justify your straddle points to enter the market. I recommend you to use the economical calendar provided in the Let's trade the news thread. It's very useful because it is made by further monitoring from pro...
Learn how to use it, and get used to it..I'm sure you can better your news-trading technique.
Hello World
Quoting nomoretoxic
What spread you're talking about??

in currency futures, you're not charged by spread. You have a fix commision between 3-6 dollars...that's it
Well....... The spread is a difference between bid and ask. Normally the spread on futures such as 6E, 6B, 6J (euro,cable,yen) and so on... is 1 tick but prior to major new announcements spread widens. Now, when you know what the spread is, you may post symbols for the futures you trade (ex. EC, 7E, 6E)<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><o></o>
Quoting Yigal
Well....... The spread is a difference between bid and ask. Normally the spread on futures such as 6E, 6B, 6J (euro,cable,yen) and so on... is 1 tick but prior to major new announcements spread widens. Now, when you know what the spread is, you may post symbols for the futures you trade (ex. EC, 7E, 6E)<o></o>
Ok I think there's a little bit of confusion here. Allow me to enligth you please.

first, you don't need to know the spread in currency futures as you're not charge by it . Spread can be as wide as 15 ticks or 100 ticks and you just don't care.

Market makers are saying that they don't charge comission but I prefer to pay 3-6 dollars per order-round trip that 30-50 dollars per spread with market makers. Plus market makers are taking the other side of your trade.

second, you have the same crosses as you have with market makers

GPB-USD, EUR-USD etc
I perosnally trade the ones I metioned above plus AUD-USD sometimes

Same thing, same price as spot forex, but cheaper and a clean price


as trading one side of the coin(just 6e, 6b etc), I don't do that nor I recomend it. The majority of the volume on currency futures are in crosses.
Quoting nomoretoxic
Ok I think there's a little bit of confusion here. Allow me to enligth you please.

first, you don't need to know the spread in currency futures as you're not charge by it . Spread can be as wide as 15 ticks or 100 ticks and you just don't care.

Market makers are saying that they don't charge comission but I prefer to pay 3-6 dollars per order-round trip that 30-50 dollars per spread with market makers. Plus market makers are taking the other side of your trade.

second, you have the same crosses as you have with market makers

GPB-USD, EUR-USD etc
I perosnally trade the ones I metioned above plus AUD-USD sometimes

Same thing, same price as spot forex, but cheaper and a clean price


as trading one side of the coin(just 6e, 6b etc), I don't do that nor I recomend it. The majority of the volume on currency futures are in crosses.
We are getting nowhere. What are the symbols for the futures you trade, and on what exchange they are traded?

P.S. Do you trade futures at all???
Oi!!! Where the fk are you toxic guy. I am desperate to get enlightened. By the way we had so much fun with your last posting, especially with this one:
Quoting nomoretoxic
first, you don't need to know the spread in currency futures as you're not charge by it . Spread can be as wide as 15 ticks or 100 ticks and you just don't care.
<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><o></o>
sorry whats slippage?


i for 1 straddlle 15-20pips on g/u 3mins to time and i focus more on NFP (due out 8th dec 2006).

any suggestions as to lot size and pip target? i managed 70pips in nov with 5lots, was good but i need better ideas

thanks
THE TREND IS UR FRIEND
1. Buy/Sell before spikes

2. use straddle stop orders

3. trade AFTER spikes (retrace or etc.)

4. something else



As far as I know, #1 is extremely difficult unless you use a very expensive news service. And #2 is getting more and more impossible because brokers/market makers widen their spreads during news.

How do you guys trade news? Lets exchange strategies!!!!
When I buy it, it moves down. When I sell it, it moves up.
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