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Trading News Risky?

  • #1
  • First Post: Edited 8:51am Oct 8, 2005 6:39am | Edited 8:51am
There are some experts who advise against trading the news because
they claim it is too risky. I have been observing the reaction of the
EUR/USD upon release of the non-farm payroll report about
3 months. There has been no huge spikes up or down prior to the
release to shake anyone out of their positions, unlike the stock market,
where this happens frequently. Risk can be greatly minimized by trading
a small lot size and using stops. You can even play both sides in 2 sep-
arate accounts. So, can anyone let me in on why trading based on news
is risky?
  • #2
  • Oct 8, 2005 10:06am Oct 8, 2005 10:06am
Quoting mmills4x
There are some experts who advise against trading the news because
they claim it is too risky. I have been observing the reaction of the
EUR/USD upon release of the non-farm payroll report about
3 months. There has been no huge spikes up or down prior to the
release to shake anyone out of their positions, unlike the stock market,
where this happens frequently. Risk can be greatly minimized by trading
a small lot size and using stops. You can even play both sides in 2 sep-
arate accounts. So, can anyone let me in on why trading based on news
is risky?
I think it's because brokers won't honor your stops during news. So if EUR/USD spiked 100 pips against your position when the release came, you will be stopped out at -100, even if your stop was just, say, 20 pips.

Best regards,
Bonete
  • #3
  • Oct 8, 2005 10:11am Oct 8, 2005 10:11am
I asked my my rep. with CMS-fx if they honor stops during news
releases, and I was told they do.
  • #4
  • Oct 8, 2005 3:45pm Oct 8, 2005 3:45pm
Quoting mmills4x
I asked my my rep. with CMS-fx if they honor stops during news
releases, and I was told they do.
You should check it yourself. They of course would say it, but most probably real-time this doesn't happen.
  • #5
  • Oct 8, 2005 5:05pm Oct 8, 2005 5:05pm
You will have to accept the slippage man. They might honor the stops during the news to a certain limit. For example, they might be able to honor your stops if the market spiked above or below it by 10 or 15 pips, but I don't think they won't honor it if the market spiked by as high as 40 or 50 pips, which is the case sometimes with the NFP.

Just be cautious my friend

Thanks,

Nader
  • #6
  • Edited 7:54pm Oct 8, 2005 7:43pm | Edited 7:54pm
Quoting narafa
You will have to accept the slippage man. They might honor the stops during the news to a certain limit. For example, they might be able to honor your stops if the market spiked above or below it by 10 or 15 pips, but I don't think they won't honor it if the market spiked by as high as 40 or 50 pips, which is the case sometimes with the NFP.

Just be cautious my friend

Thanks,

Nader
It's not really about honouring stops. It comes down to a simple matter, did price trade there or not? If price spikes, as Narafa pointed out, then you'll get filled at the closest "tradeable" price. And bracketing price can can get you whipped around like a frog in a blender. Best wait for the 3rd move after news to gauge which way the market will likely go. Check this video http://www.tradethemarkets.com/video/fmoc/fmoc.html
Or as BunnyGirl would say, wait for Mr Sheen
  • #7
  • Oct 11, 2005 1:58pm Oct 11, 2005 1:58pm
The both side trading is good before FOMC rate decision. When Greenspan speaks before FOMC releases rate change, you notice that martket moves by 20-30 pips up and down in about 1-2 minutes just withought direction this is going on until FOMC releases rate change.

But still it is very risky.
kiss the trend
  • #8
  • Oct 12, 2005 6:29pm Oct 12, 2005 6:29pm
Quoting SoyYoConBonete
I think it's because brokers won't honor your stops during news. So if EUR/USD spiked 100 pips against your position when the release came, you will be stopped out at -100, even if your stop was just, say, 20 pips.

Best regards,
Bonete
its funny you say that about stops my broker did not honor my take profit and gave me 20 more pips on nfp day. have this ever happen to you.
If I Go Broke Trying Then I Will die happy.
  • #9
  • Jul 29, 2007 3:39am Jul 29, 2007 3:39am
if you learn how technical and fundamental works, it is not too risky
  • #10
  • Jul 30, 2007 9:15pm Jul 30, 2007 9:15pm
there is no risk in forex. everyone makes millions on the news releases.
Keep it simple stoopid....
  • #11
  • Jul 31, 2007 12:00am Jul 31, 2007 12:00am
Quoting Kurka Fund
there is no risk in forex. everyone makes millions on the news releases.
Of course you are correct, Kurka. Risk??!! Where does all this negative thinking come from anyway?
  • #12
  • Jul 31, 2007 12:12am Jul 31, 2007 12:12am
Quoting Kurka Fund
there is no risk in forex. everyone makes millions on the news releases.
lol, nice one
  • #13
  • Aug 2, 2007 12:19pm Aug 2, 2007 12:19pm
Everything is risky. Driving is risky, but you dont have to be a risky driver. Keep that in mind and you will do fine.

Chris

Quoting eagle4x
There are some experts who advise against trading the news because
they claim it is too risky. I have been observing the reaction of the
EUR/USD upon release of the non-farm payroll report about
3 months. There has been no huge spikes up or down prior to the
release to shake anyone out of their positions, unlike the stock market,
where this happens frequently. Risk can be greatly minimized by trading
a small lot size and using stops. You can even play both sides in 2 sep-
arate accounts. So, can anyone let me in on why trading based on news
is risky?
  • #14
  • Last Post: Feb 1, 2008 11:04am Feb 1, 2008 11:04am
Quoting narafa
You will have to accept the slippage man. They might honor the stops during the news to a certain limit. For example, they might be able to honor your stops if the market spiked above or below it by 10 or 15 pips, but I don't think they won't honor it if the market spiked by as high as 40 or 50 pips, which is the case sometimes with the NFP.

Just be cautious my friend

Thanks,

Nader
Slippage is just another big way for banks to make money at your expense, an excuse to push a move in their favor while drowning you out with the leftovers. This can occur at anytime, not only News Reports.
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