News report and correlation

Hi, everyone !
This question has bothered me since a long time. Let's say we are waiting for a news report(red/important) at 09:30 GMT for GBP and usually most of the retail traders will avoid to trade during these time(like 30-60 min before and 30-45 after) because of the unpredictable behavior of the market.
We know that there is correlation in forex.
Does this mean that:
a) It's not recomended to trade just "GBP pairs" and OK to trade other pairs?!
b) It's better to stay out of maktet in general during "red" news time.


The same question is for news reprorts for such pairs as EUR, CAD, AUD ???

PS: There is a possibility that every trader prefers different answers, but I would like to hear different oppinions and motivations;

Regards;

Hey!

I'm pretty new to all this I've only really been trading with varied success for about a year and have only got into the Economic side of things for a month or so...
But if any of you straight talking, no dancing around innuendo, type traders want to respond to this I'd be really appreciative.

Here is what I'm doing for trading the News Spikes:

First off (I'm gonna be totally nude with the facts)
I trade with "Go Markets - Aus" - Great fills, low pips spread, and just... lovely people..

I check the FOREX FACTORY calender for High Impact trades I like.

I set up your standard pending orders around the market pair I'm trading literally with a FEW MINUTES to spare...

I look on a 5 or 1 minute graph for the very recent support and resistance - If volatile, the last couple of bars for my highs and lows.

I setup my first pending order in the direction I believe the spike will go - I IMMEDIATELY setup my stop-loss for a max of 4 pips

I setup my second pending order in the opposite direction - Again I IMMEDIATELY setup the stop-loss for a max of 4 pips

To BOTH I attach a trailing stop-loss set to approx (and usually max) of 5 pips (Go Markets are a broker that do price to 1/10 of a pip so trailing stops are entered as '50')

This is all with minutes to spare, and boys and girls I am excited by now! (Can you feel the tension??)

1 of 4 outcomes happen from here:
ABSOLUTE WORST CASE: A big'ole whipsaw takes place activates both orders and stop-losses and I'm out for 8 pips (pass me a tissue)
PAIN IN THE BUTT CASE: One order takes, (other is cancelled) goes into profit enough to move my trailing stop to break even then takes me out for a zero loss/profit
BELOW AVERAGE CASE: One order takes, (other is cancelled) goes into profit, and generates a meagre profit result.

SUPER SWEET LIKE CANDY CASE: One order takes, (other is cancelled) goes into profit, shoots for the moon and stars and the trailing stop just follows like a chubby kid chasing a slow moving ice-cream truck... The spike relaxes and the trailing stop closes the trade for a good profit...

--------------------

Now this has played out just fine for me so far so, if this is perfection itself then, my people.... enjoy..

If there is a tweek or you're doing something even better then, I've showed you mine, show me yours!


I tend to find that (as is probably obvious) that the Calender result is more a retrospective confirmation of why a market did what it did. I let the pending order take and clean up after myself... Then I look to the calender to confirm what the actual result is.
I'm not paying for a news feed, I don't want to buy in at market price when I see something happen, and obviously I can't wait till the result is confirmed before acting...

So talk to me!













If you peeps could tell me your methods / better methods / or tweeks for this or anything I'd love you thiiiiiiiiiiis much.... xx

Hwaand, I think you missunderstood the meaning of the thread. I didn't suggested to write about trading the news here, rather discuss news reports and it's correlation between different pairs during news time...

Hey Straw!

Apologies, I kinda took a tangent because I'm not allowed to post a new thread yet..
For your question (for what its worth) Its my understanding that staying away from the pairs directly affected by the news release is being conservative enough...

Cheers y'all!

Hi,

News trading is good but some time not easy like in Greece crisis. Market kept ignoring all good data for europe & focused on selling Euro. Good number sell, bad number sell. You must take care for the market mood & some time for equities.

Of course we can't ignore the impact of big event like BOE over the wire & kings kicking down GBP or NFP but take care as most news will be already priced in if price meet expectation. Big moves mostly happen when market get caught off guard.

Regards
13

yes i noticed that on friday the news was bad for usd all day and gbpusd just kept going down, even though if usd news is bad gbpusd should go up.

fx13, thank you for your thoughts. But actually I don't want to trade the news-I usually not trade like 1H before and 40-45 mins. after "red" news. But what I was really wondering is this: for example we have news report(red/important) at 09:30 GMT for GBP, so for me it means I will not trade gpb pairs like 1H before it annonces; but at the same time(like 1H before this news report) I have a setup for a trade on (let's say) eurusd on a 1M tf (or 5M tf). How much conservative / aggresive will it be to take that trade ?

I am a beginning fundamental student...what I read so far points to 'knowing' the correlation at that point in history. For example, last week when USD starts declining due to bearish economic data (CPI, TIC etc), EUR,GBP,JPY are also correlated. This maybe is due to the unpegging of the China Yuan which some traders view that China will start shifting purchasing of US investment towards other countries. For example JPY.

So for your question, i would say a)If you are aware that those other non GBP are not 'correlated' somehow, then it may be tradable.

As for b) staying out of the market. My current believe is that the big players are already in the market long before the news release, based on their predictions and long term monitoring of the trend. The news only confirm their prediction and they will adjust accordingly. This means that once the news is out, it is meant for the 'next' period eg next month. For us, if we want to open a trade before the news announcement, we are taking on more risk.

So my current trading inclination is to avoid trading before the major red news. I only enter the trade on the pullback in the direction of the clear trend after the release of the news. For example, when multiple factors indicate that the USD is going to be bearish, I waited for the TIC data to come on, the USD plunge, pullback onto a fibonacci level, I will enter. This is for short term trading profit, maybe 50 to 100 pips.

For longer term trading, I will also enter at the pullback, put the stop lost at the appropriate level, then put the profit target at the next valuation level. This valuation level would be a guestimate of the next month results, and as mentioned, it will be adjusted when the next red flag news come on. If correct trend, just follow it, if red flag news points to a neutral or bullish trend, then close the trade etc.