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Trading before news

  • #1
  • First Post: Nov 17, 2012 4:06am Nov 17, 2012 4:06am
A win rate of 50% is very good, assuming a reward to risk better than 1:1.

News has a 50% chance of sending price in either direction.

People often state "do not trade around news" but does this really matter if everything is 50/50?

(I understand that news agreeing with a trend often has stronger affect than news going against a trend but then your SL may be closer to price than your TP)
  • #2
  • Nov 17, 2012 11:38am Nov 17, 2012 11:38am
What makes you think it is 50/50 .. ? No movement in forex is 50/50.
  • #3
  • Nov 17, 2012 6:03pm Nov 17, 2012 6:03pm
what I mean by that is, if price is going to move after a news release then there is a 50% chance of it going in either direction. If you look at a 1000 news releases whereby price moved significantly, approx 500 will go in each direction. Whether the news is good or bad is irrelevant, the split over time will be 50/50.

A fundamental trader will argue that a particular news realease will have more than 50% chance of going in one direction. However, I am looking at it from a purely technical slant and that the probability over a long term will be 50%.
  • #4
  • Nov 17, 2012 7:09pm Nov 17, 2012 7:09pm
its not the news that stop people trading it its the market that stops people most of the time the low liquidity makes it hard to get filled or stopped out and when you do you can be slipped a lot of points it might be a 50/50 move but all the odds are still stacked against you.

WENDIGO
  • #5
  • Nov 17, 2012 9:10pm Nov 17, 2012 9:10pm
Quoting richhand
what I mean by that is, if price is going to move after a news release then there is a 50% chance of it going in either direction. If you look at a 1000 news releases whereby price moved significantly, approx 500 will go in each direction. Whether the news is good or bad is irrelevant, the split over time will be 50/50.

A fundamental trader will argue that a particular news realease will have more than 50% chance of going in one direction. However, I am looking at it from a purely technical slant and that the probability over a long term will...
If you say so.
  • #6
  • Nov 17, 2012 9:57pm Nov 17, 2012 9:57pm
Quoting richhand
A win rate of 50% is very good, assuming a reward to risk better than 1:1.

News has a 50% chance of sending price in either direction.

People often state "do not trade around news" but does this really matter if everything is 50/50?

(I understand that news agreeing with a trend often has stronger affect than news going against a trend but then your SL may be closer to price than your TP)

sure, the probability that price will move in one direction is 50%. That does not mean that the probability of your success will be 50%. Dealers and br0kers are always 2 steps ahead of you on the news. Slippage, wide spreads, no fills, and the fact that you are always buying on the ask and selling on the bid, are just some of their nasty tricks to get your money. Price makes news, not the other way around. News trading is for suckers, and if you can show me live results over a long period of time where a retail trader has consistently beat the market by news trading, I'll stand corrected....but you will never find this for all the reasons I've explained. Stay away from the news.
  • #7
  • Nov 19, 2012 7:56am Nov 19, 2012 7:56am
The main problem there - 1-spread, 2-requotes, 3-better to use EAs for the fastest trading
  • #8
  • Last Post: Nov 19, 2012 8:44am Nov 19, 2012 8:44am
Quoting mfoste1
News trading is for suckers, and if you can show me live results over a long period of time where a retail trader has consistently beat the market by news trading, I'll stand corrected....but you will never find this for all the reasons I've explained.

You are totally wrong. This is well known here on FF that there's a private Elite group who is trading only news ... and with great success.
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