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Why aren't traders who straddle the news successful?

  • #21
  • Aug 31, 2013 11:14pm Aug 31, 2013 11:14pm
We don't have enough capital to absorb the losses. You can be on a row with a long winning streak but all it take is just ONE losing trade and it can wipe out ALL of your previous wins and you are back to zero or worse land in a -ve territory. Plus the slippages and increased spread during news time can really do you in.

I gave up on trading news long time ago. I will reconsider trading news when I find a broker that has ZERO slippages and constant spread during news time. So far, I haven't found it.
Make your losses in demo. Earn your profits live.
  • #22
  • Sep 3, 2013 12:33am Sep 3, 2013 12:33am
I meant, many times as a news trader I wanted to have a nervous breakdown as I watched the candle shoot up and then reverse, up and then, stall, down and keep dribbling down for another 10 min of good news and in the end, after an ulcer and high blood pressure walked away with my 30-40 pips on the trade. The kick in the rear came 3 days later most times when my system would have had me in the saem side as the news anyway...but for 3 days. So....did I win 40 pips, or lose 360 as 400 pips would have been my take profit. Thats what my headline should have conveyed. Yes there is money to be made trading news. Im just saying its not for most people. And show me 10% of news traders dont wind up just pressing buttons as they were right but now they are really right, oh no its coming back, let me go short,thats the real money and then 30 min, 60 m and 3 hr later its back in the same spot! Or at least got you out at break even.Break even to me when trading news should be re-initialed-WT- for waste of time. Yoiu should not often be trading news and break even. Just my experiences. And as I mentioned before, I wonder how many of the big 11 banks have shell or subsidiary co's set up just to trade this news. Those are the guys I want to be sitting behind. If ever there is going to be an exact get in/get out number...thats the time. Guess those are the jobs you dont find advertised. -) I spent 8 yrs as a wall st broker looking for that kind of gig. You have to know God. -) "We guess and they know"...as my horse racing pals would tell me every time I went to the track in my younger days.
  • #23
  • Sep 3, 2013 12:55am Sep 3, 2013 12:55am
Quoting vox dei
Hello Silat. Credit for the post content should go to Glen. The bottom line here is that it is possible to make a lot of money trading the news, be it spike, straddle, or the retrace immediately after release. After all news is what moves price. Beware of the 'brokers' though. Most will do everything in their power to deny retail the conditions required to profit.
So, just find the right broker
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It takes a lot for me to IGNORE you, but you can try.
  • #24
  • Dec 23, 2013 1:15pm Dec 23, 2013 1:15pm
Hi Silat50

Very insightful posts. However, I must point out that I made money just by straddling every red announcement on this site -- until my broker placed restrictions on my trading preventing me from winning. I probably can't identify the broker here, but their name has an I and a G in it. Don't use them.

By the way, which style of silat do you practice? I spent a number of years on this activity.
  • #25
  • Dec 23, 2013 1:58pm Dec 23, 2013 1:58pm
I trade straddles on stock & etf options pretty regularly. Some of these make money some m/l break even and some lose. But it's a lucrative enough strategy that I am always looking for chances that will likely succeed - straddles bought on weekly options just before earnings announcements an example. Options are exchange traded instruments and don't suffer the same types of tricks found in otc markets such as forex...
"If The Fool persists in his Folly he will become wise." - William Blake
  • #26
  • Dec 23, 2013 6:21pm Dec 23, 2013 6:21pm
I was a news trading partner with BK & Maxey a few years ago. I can personal attest that the concept of news trading does work. You get 20 or so good news pieces a month to trade and out of that 20 maybe half have a divergence that triggers a trade. Unfortuantely the broker stacks the deck against you. BK & Maxey have personally traded various LIVE $5k accounts of mine and run them well over $100,000 in 6 months time only to watch more times than not the broker NOT PAY!!! Forget ALL the various Broker games already discussed...lags, non execution or executions at the top/bottom of the move, stop loses ignored etc etc. The bottom line is many of these brokers are in countries that have no teeth to force them to pay you. If these small to mid size brokers pay you, its money out of their pocket. So they create excuses like you were trading illegally or you were using unfair trade practices to take advantege of them or their platform or feed. A true story, 5 years ago I had an account at a broker in chicago called ONE WORLD, we news traded that live account from $5k to $35k in about 2 months. We went to withdraw and the broker refused. This broker was eventually shutdown. The owners were arrested, charged and sentenced to I believe 10yrs in prison. We sued and won the case but have never seen a dime. http://forex.fo/?Article=One%20World...ud&Code=NDkyNA== This is not an isolated story.
Now I have heard there are traders that still are successful at trading news but they do it on very small amounts and withdraw quickly. Which is fine unfortunately by keeping the gains/profit low you never seen any substantial winnings. Just scraps.
Enter Signature
  • #27
  • Dec 23, 2013 6:47pm Dec 23, 2013 6:47pm
Quoting jamesr24
I was a news trading partner with BK & Maxey a few years ago. I can personal attest .....
as good a testimony in favor of exchange traded instruments as may be found
"If The Fool persists in his Folly he will become wise." - William Blake
  • #28
  • Dec 24, 2013 2:48pm Dec 24, 2013 2:48pm
Quoting jamesr24
I was a news trading partner with BK & Maxey a few years ago. I can personal attest that the concept of news trading does work. You get 20 or so good news pieces a month to trade and out of that 20 maybe half have a divergence that triggers a trade. Unfortuantely the broker stacks the deck against you. BK & Maxey have personally traded various LIVE $5k accounts of mine and run them well over $100,000 in 6 months time only to watch more times than not the broker NOT PAY!!! Forget ALL the various Broker games already discussed...lags, non execution...
Thank you for your eye-opening experience. Do you know any broker that actually pays?
  • #29
  • Dec 24, 2013 4:34pm Dec 24, 2013 4:34pm
I am sure there are some brokers that do pay but the traders that find them do not share who they. And as I pointed out, I am +++ very few if any traders are making and withdrawing $10,000+ a month from news trading. No broker will allow it. Its money DIRECTLY out of the brokers pocket. Maybe some traders are making few hundred dollars here and there but thousands of dollars a month, I seriously doubt it. Do the math, a traders takes 10 news trades a month and wins on 8 of them, he trades a 1:1 win lose ration. And lets assume the trader made $10,000 on those 10 trades gross or $1000 a news trade. He lost two trades and lets assume that net lose was $2000 ($1000 each trade) So the broker makes a commission on those trades and the profit from the two loses, trader nets $7500 ($10,000-$2000 loses - $500 commission) and the broker nets $2500. Now the client wants to withdraw his $7500 for the month, NO WAY a broker will allow that!!! Maybe once, maybe maybe twice but once the broker catches on its game over. Learn to scalp a nice stable pair during high volume times like the EU or UJ. You will make so much more without any issues from the broker.
Enter Signature
  • #30
  • Edited 7:12pm Dec 24, 2013 6:20pm | Edited 7:12pm
I am not sure $$ amount has any thing to do with paying or not paying. A friend of mine trading the news in a small account at InstaForex. He made small profits from time to time for a couple of months. One day, InstaForex deducted all profits from news trading about $400 from his account.
  • #31
  • Nov 6, 2014 1:54am Nov 6, 2014 1:54am
Hi leor,

Very interested in the strategy. How do you do it?

Look forward to hearing from you, thanks.
  • #32
  • Apr 18, 2015 2:41pm Apr 18, 2015 2:41pm
I just traded the USD news yesterday for the first time and lost 45 pips. The good news is I know why I lost - I did an OCO (One-Cancels-Other) Buy and Sell but I didn't have a stop loss. My Buy order was hit but the market reversed before I knew what hit me.
  • #33
  • Nov 10, 2015 8:50am Nov 10, 2015 8:50am
Hey Guys, I'd like to add my experience on straddle/spike trading to the topic.
I've been trading using my own EAs in the past, which lead me to extend my researches on brokers regulation/quality around. If you decide to go for any kind of arbitrage feed or any kind of fast-speed execution broker I would advise you a few I have been happy with. Only the good ones.
- Exness (RU): was one of the first broker I've traded with, very good experience for micro account (I'd say even better than Alpari UK and with tightest spreads for a market maker), excellent execution and low slippage around news. Quite easy withdrawals/deposits
- Tickmill ECN (FSA regulated, Seychelles): I've been scalping and trading news on Tickmill for 6 months last year and have been pretty happy with their low slippage/commission.
- Pepperstone (AUS): Since I've been living in Australia and met a few guys working there I decided to switch my main account onto a Pepperstone Razor, the commission is average for an ECN but I have never experienced requotes trading limit orders on spikes, and they are under the Australian regulation. Execution and withdrawals take a few minutes, the spreads are as low as competitors suck as FxOpen/Darwinex (I only tried FxOpen and was disappointed).
I'm not here to advertise anything, just give my little experience away and hope you guys will appreciate it.
I am now only trading news as I cannot put too much time into trading at the moment (Msc + job aside).

I would like to remind everyone messing with news impact a few keys to succeed in this strategy:

- Only trade High Impact news or look for a market breakout on a medium impact
- Forget about your emotions, they will always make you take your profits too early on spike whipsaw, and make you set your sl too close to the pre-news range, leading to a loss in case of early retracement/slingshot.
- Scale your positions out. ie. most FOMC/CPI/NFP news being extremely violent, I like to set up to 4 take profits (from 15 to 100 pips) depending on early retracements/fibo levels. Half my initial lots exit the market in the first 10s following the release on the first/second TP, no trailing on those two. (But that is just my way)
- If the market does not react in the 10s following the data release, do not enter the market as it often ends up in a choppy slingshot = minefield for straddle traders.

Cheers!
Edorenta
You'll always miss 100% of the shots you don't take.
  • #34
  • Nov 11, 2015 1:51am Nov 11, 2015 1:51am
Quoting Forexia
We don't have enough capital to absorb the losses. You can be on a row with a long winning streak but all it take is just ONE losing trade and it can wipe out ALL of your previous wins and you are back to zero or worse land in a -ve territory. Plus the slippages and increased spread during news time can really do you in. I gave up on trading news long time ago. I will reconsider trading news when I find a broker that has ZERO slippages and constant spread during news time. So far, I haven't found it.
What about holding no more than the required margin for straddle trades +using credit bonuses offered by your broker? You can't lose more than you deposit we can take advantage of that.
  • #35
  • Nov 11, 2015 3:07am Nov 11, 2015 3:07am
http://www.forexfactory.com/showthread.php?t=156106
  • #36
  • Nov 11, 2015 5:52am Nov 11, 2015 5:52am
Quoting leor
Why aren't traders who straddle the news successful?

Because it's an extremely high-risk strategy (and like most extremely high-risk strategies in forex trading, in practice a strategy typically undertaken by traders ill-equipped and ill-prepared to assess its risks and use position-sizing appropriate to them).

Spikes in both directions are so common that it's very easy to get the overall direction right and still lose money.
  • #37
  • Nov 11, 2015 4:24pm Nov 11, 2015 4:24pm
Quoting Xela
{quote} Because it's an extremely high-risk strategy (and like most extremely high-risk strategies in forex trading, in practice a strategy typically undertaken by traders ill-equipped and ill-prepared to assess its risks and use position-sizing appropriate to them). Spikes in both directions are so common that it's very easy to get the overall direction right and still lose money.
A good broker, used along with proper money management/sl/trailling strategy will get you through the risk.
I met several prop traders working for institutional fund making loads. But just like any other strategy, 90% of traders cannot stick to the rules and handle the whipsaw.
That being said I understand that most people will go your way saying that this is too risky, but at the end of the day the average risk/reward you can draw from spikes is unbeatable.
The liquidity/volatility is back these days, you should give it a try.
You'll always miss 100% of the shots you don't take.
  • #38
  • Nov 11, 2015 5:00pm Nov 11, 2015 5:00pm
Quoting Edorenta
{quote} A good broker, used along with proper money management/sl/trailling strategy will get you through the risk. I met several prop traders working for institutional fund making loads. But just like any other strategy, 90% of traders cannot stick to the rules and handle the whipsaw. That being said I understand that most people will go your way saying that this is too risky, but at the end of the day the average risk/reward you can draw from spikes is unbeatable. The liquidity/volatility is back these days, you should give it a try.

Yes - I agree with all of this.

It remains true, though, that in practice scalping is usually a strategy undertaken by traders ill-equipped and ill-prepared to assess its risks and use position-sizing appropriate to them, so it's surely not what I'd advise beginners to do: it will stack the deck against them. Most retail traders who try it will fail. Institutional traders, of course, do it all the time - and very successfully.
  • #39
  • Nov 12, 2015 3:37am Nov 12, 2015 3:37am
Trading the news within minutes of its release is very tricky for lots of reasons. Retail brokers shelter themselves from the consequences by various methods, the main one being increased spread. Price spikes that are not even recorded on the chart are common on ECN feeds. When you have done the research to understand why this happens it will leave you with other news trading options which should also be researched.

Forex Factory supplies historical news data and your charts do too. It requires work, but hey, I'm not here to tell you to do the work. It's up to you. On the other hand I'm not prepared to spoon feed as this doesn't help either. Why? Because give someone a profitable trade they'll probably make a moloch of it, either by greed (over leveraging), fear (under leveraging or closing too early) or some kind of pure ineptitude. I know because I do it. Then they will look for someone to blame. See? That's why good traders don't post much here. I can already feel you bristling.

In the spirit of sharing I'll point anyone who is interested in the right direction. Take a look at a strongly trending market. To do this you need to be looking at monthly or weekly markets. What is it doing at the moment? If it is consolidating on the daily or hourly it is waiting for something. Study where and when it did that before. Then find out when it moved and why. Usd/Cad is a good example. I've been trading long off the news on that pair for years. Years.

You don't have to be sitting there the minute the news is released. Thanks for your time.
Gone to a better place
  • #40
  • Nov 12, 2015 4:38am Nov 12, 2015 4:38am
Quoting smikester
Study where and when it did that before. Then find out when it moved and why. Usd/Cad is a good example. I've been trading long off the news on that pair for years. Years. You don't have to be sitting there the minute the news is released. Thanks for your time.
Hey smikester,

You're right, and that is something I advise anyone to do: for CPI/FOMC/NFP/Unemployment releases, have look at how the market is trending daily (reflecting expectations), and how it did historically.
However this is a wise speech, blending fundamentals and technical analysis. Most of the big fish I met told me indirectly that all that matters is not the news itself or the pre-release range, but the pire price action during release. And most of these high impact news don't mess/sling sideways. That's why (once more with a good broker cause as you say, requotes/slippage/spread are against you the very minute of the release) smart straddle works. One of the ECN I used to trade with had a bad liquidity and very sharp moves during news, but there is always a way around (i.e. you can edge 2 opposite trades on the pair 10 mins before the news to get the best spread possible, and set your SL as your entry points of the opposite trade would be on the straddle).
Are you speaking about ABC trades on the USDCAD? The fact that the moves are always corrected, therefore you can jump in after the first retracement after news?
Cheers,
Edo
You'll always miss 100% of the shots you don't take.
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