How long after a major news event is it safe to trade?

How long after a major news event is it safe to trade?

Hello DonnaMag,

To trade news, you have to first look and note the important things, such as:

1. How strong the impact is.
2. If there is a fake move on that news or not.
3. How your trading experience is.
4. And what your trading strategy is.

If there is not a big difference on a news impact then forecast, than it is not suggest to trade on that impact. Because it will only give you a spike up or down (whatever the impact is) and then will turn into the normal trend.

If there is an fake spike in market. For example: If the impact is strong positive for the pair and the pair is getting week, then it is also not suggested to trading on that. Only scalping (fast in fast out) is suggested here.

If you are trading experience is well enough to manage the news and trade, then you can be surely add more positions on your scalping, otherwise it’s better to stay out.

A normal news trading is based on the impact number. Always wait for the news out coming and don’t enter the market, when you see the first spike (because it can be a fake spike).

So wait for the numbers and have see the difference and the enter trades.

And if the news supports then trend, then you can surely add more trades on that.

Example: EURUSD trend is down and you have a strong number on USD news, so it should put it more down and the trend is also down, so that’s a good point for more selling.

Hope you understand the main points.

Regards

Great question! Major news such as interest rates or non-farm payrolls tend to have high impact on the market. During the release of the data, spread might get widen and the market is volatile. Likewise, the market can be extremely volatile and you cannot spot a clear direction. It is hard to tell how long you should wait after the news, because sometimes their affects linger. I usually wait till the markets are calm, at least 10-15 minutes after the release, or till I notice a clear trend.

Some useful input above.

I second it is not how long BUT what impact the news has.

More importantly is the market now setting up to provide an entry to trade as per the strategy you follow as per your rules. Or do you need to walk away.

You should never try and second guess the impact of KEY news events.

makingpips

I would use volatility indicators. Otherwise if you trafe with M30 or H1 you should be ok with those news, most of them introduce noise in the system, but they do not affect the main trend of the day.

Sometimes opening a deal right in the time of a release is very hard because of regular requotes so it's better to open a position just before the news. But of course the presence of requotes depends on your broker.

You should probably avoid major news days entirely at the beginning. Maybe do some practice account trading on news days to get a feel for how the market responds to news, but the market will respond differently in different situations and different market conditions and different news and depending how big of a surprise it is and depending on when the release time is during the day, etc. Best to stay well clear at the beginning until you are a more experienced trader.

News is only news for the public like us. News is already old news to those who have deep pockets to purchase the news before it comes out. Luckily, these big boys leave marks on the charts that give us pointers as to what they're about to do.

Volume is one of three main pillars in my trading (trending and structure are the other two).

Volume and structure are marks that the big boys leave on the charts. On a particular news event, the big boys have already opened their positions beforehand and are ready to make a killing (over the next two weeks to a few months). Remember the old 2 for 1 rule. I risk 1 to make 2, but I must make 2, or else, I won't play. The big boys follow this rule and you can see this riddled throughout many forex charts, and is especially noticeable on daily gold charts.

For example, when the big boys step in to hold up the EU at 1.38xx, they will do so with great effort. Their mark is left on the chart for the public like us to decipher. Based on the downtrend prior to the July 12 up move of the EU, for example, the big boys have already set their orders. The trend was down behind July 12. Ultra high volume, with respect to previous bars, signals a step in by the big boys.

Here was potential news: http://www.dailyfx.com/calendar/?tz=...=true&low=true

Here was the up move:

http://content.screencast.com/users/...09-05_1914.png

The moral of the story is to "read volume" during a news event and take note of what's happened to the bars behind this volume. Run with the wolf pack of hunters. Not with the herd of prey...

Hey Ha-pattern,

Thanks for the notes. The 2-for-1 I'm talking about does not relate to a trader setting stop losses and taking one of two lots off after price moves in his/her favor.

What I'm referring to is the big boys' risk/commitment/cost vs. reward. When I say big boys, I'm referring to those with pockets deep enough to actually move the markets. They can include bankers, brokers, prop trading firms, and/or other private traders/investors.

For example, the chart I posted (shown below again more clearly) shows the potential setup of the big boys. They don't necessarily have to place their orders in a hurry; they have ample time and the brokers know this. In fact, because many of the biggest brokers can see all the open orders on their books, they have incentive to spend a little cash to tip the market here and there during down times in order to "get to the big boys' orders." After all, if you're a broker and you can trip one or two orders of a few million lots each, your spread/commission earnings will clobber any of the risk involved.

http://content.screencast.com/users/...09-05_2218.png

Thus news is something that the big boys use to trade against the herd of prey. "Thank you very much" is what they're saying when the herd of prey is shorting the heck out of an instrument due to bad news, and the big boys are just buying what the herd is selling, with the opinion that it's "cheap enough." Sure, the selling may overwhelm the big boys' buying, and that's why we sometimes see huge volume spikes on down bars (due to bad news) and price falls even lower. For example, if the first step-in by the big boys was to purchase at 1.38xx for the EU, and supply is overcoming the big boys' demand, you will see price fall lower, perhaps to 1.37xx. If the big boys are serious about buying up the market, they will step in again at even lower prices and buy up even more, say at 1.37xx. This will leave yet another high volume mark, of course, and it is this range of 1.38xx - 1.37xx that the big boys have now committed to the instrument. They will want the price to move higher from there to a point of at least double or 2x of the range of commitment they have put forth.

HOWEVER, they need to test the market to see if there are other big boy groups who may trade against them. They're not all friendly to each other, but their actions are big enough that they leave marks on the charts when they're in battle or in sync. Thus, volume is a hint that someone stepped in, but it's not a signal in itself (for example, during news) that it's time to buy. Only when you see tests of price (tests of structure like support, resistance, breakouts, etc) on low volume, which would accompany a trending move, can you confirm that the big boys are ready for the killing to bring price up (aka my simple VTS or Volume, Trend, Structure system). During the course of the up move, you'll see retracements (higher highs / higher lows). That's all a result of the testing done by the big boys by influencing the actions of the market makers (e.g., brokers, banks, etc.) and, of course, some noise selling here and there by the herd.

Hope this helps.

This is the post Mr. kkorg refers to:


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Interesting take on order flow.
to understand --

"2 for 1 rule" is explained here.

On your chart, you claim the two large, all-body candles are an example of big-$ players entering the market in a hurry; in the noted formation, the two candles cancel each other's effect on price level.
Related: In the minutes before a large-, or active-interest mid-, cap (US) stock's earnings report after hours (4 pm EST), a countermove may pop up (or down) before price goes in the opposite direction when the news hits. Again, counter's effect canceled in major move.

Your statement that
" the news before it comes out. Luckily, these big boys leave marks on the charts that give us pointers as to what they're about to do"
is the boldest I've ever read about the subject. One interpretation of it is that most retail traders should concentrate their efforts on TA of the hour or so before every major news event.
Can you give an example of this that narrows and/or standardizes the (pre-news) window typical of this effect,
say, with much fewer candles before the minute the news is announced?
My idea is that each of these areas would share with all features that help create its pattern.
-- Actually, I now recall another news-minute area with another area several hours later that correlated nicely with the news minute to project.



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Okay, so volume can be used to place levels. I guess it'd have to be supported as volume relative to the session's average.

I like the "tests of price" idea. It kinda makes official some of the hoopla sketching I do on a chart.
And forex is all about tentative new levels and definite retracements.

Thanks for the extra explanation.

I think that the most volatility after major news are made by scalpers, who scalp first 10 minute after the news come out, after that they will mainly close they scalps and market is less volatile. So my answer is 10 minute.
On another hand, can big news, like US NFP change the trend of the market for whole month, but thats normal for technical traders.

2 hrs