Trading the news immediately after release | Forex Factory

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Trading the news immediately after release

  • #1
  • First Post: Nov 18, 2013 12:38pm Nov 18, 2013 12:38pm
hi folks,
i am just wondering whether taking trades once you see where the price is going after a news release (after 1-5 sec) is a good strategy?
i've tried it three time successfully and having checked the last 20 big (red) news releases, only one time the price moved 10 pips up before going down.

i know it is risky (spread, slippage...) but what do you think?

best.
  • #2
  • Nov 18, 2013 5:21pm Nov 18, 2013 5:21pm
depends what news you are trading, but make sure u keep SL all the time, orlse it can blow your account in no time.
One PIP at a time-My system is automated and now I have ample time
  • #3
  • Nov 19, 2013 2:48am Nov 19, 2013 2:48am
You can do that, but it's very risky. I wouldn't focus on that as my main trading strategy.
  • #4
  • Nov 19, 2013 3:36am Nov 19, 2013 3:36am
There is a high possibility to hit Stop Loss
  • #5
  • Nov 19, 2013 4:45am Nov 19, 2013 4:45am
The question is then - what is termed "good"?
Believe that thousands of people out there each has several strategies, so which are good and which are not?
You cannot simply say the good ones are the ones that make money. If you did, then how if they do today and not tomorrow.
You see what I mean, so name your criteria.
About your particular strategy, it's one. If it's not good then it's not one (nothing) but I believe many trade using it, just how they follow matters.
But to myself, it doesn't mean an assurance for profits. You need more, a lot than just the news, so to say.
Have you ever experience a pair, like XAU/USD, jumped back and forth hundreds of pips for just an hour time after the news? Guess not, then think about it.
How much chance would you get a win, how a loss? If you know the answer then you are better an expert than me and just forget my post.
  • #6
  • Nov 19, 2013 4:47am Nov 19, 2013 4:47am
I did that last night and did not work, price went down fast like 10 pips and then for next hours went 60 pips to the other side.
  • #7
  • Nov 20, 2013 3:44am Nov 20, 2013 3:44am
Quoting fxjorr
I did that last night and did not work, price went down fast like 10 pips and then for next hours went 60 pips to the other side.
Yeah, I also tried this a couple of months back. But really hard to make some profit due to the high volatility. Also my broker increases the spread during the news time.
  • #8
  • Nov 20, 2013 8:30am Nov 20, 2013 8:30am
Quoting Alanamc
{quote} Yeah, I also tried this a couple of months back. But really hard to make some profit due to the high volatility. Also my broker increases the spread during the news time.
Looks like after the news price go quickly to a level and from there go to the other directions. Not sure if is always like that, but i saw it sometimes.
  • #9
  • Feb 6, 2014 5:19am Feb 6, 2014 5:19am
I am not sure buying on the "jumps" is a good plan although I have done it before myself. I think that you should try to predict the movement direction and apply a stop loss but choosing the direction can be difficult since you dont know what way the data will go.
I am asking questions on "Trading the news immediately after release" also so if I find out what others are doing and it makes sense I will come back here and post for you.
  • #10
  • Feb 6, 2014 7:37am Feb 6, 2014 7:37am
Quoting zmalick
I am not sure buying on the "jumps" is a good plan although I have done it before myself. I think that you should try to predict the movement direction and apply a stop loss but choosing the direction can be difficult since you dont know what way the data will go. I am asking questions on "Trading the news immediately after release" also so if I find out what others are doing and it makes sense I will come back here and post for you.
Even if you are master trader. It is really difficult to trade news. I also tried this and asked this from some persons known to be experts. Didn't hear anything positive so far
  • #11
  • Feb 6, 2014 8:08am Feb 6, 2014 8:08am
i like to Trade the News pressers like FOMC and ECB as this morning. The events last longer, there is tons of volatility due to all the Algos, and it creates a nice opportunity to scalp both long and short
  • #12
  • Feb 9, 2014 10:54am Feb 9, 2014 10:54am
Hey inad07,

I've been trading Forex for a while now and can say with a resounding conclusion that the answer is "no." Go back on your charts and pick any major news event, let's say the NFP. Pick one USD pair, and drop down to the 15 minute chart (or better yet the 1 minute chart). Now, go back in time and look up NFP results, and see if they correlate with price movement. You'll find that they don't. Sometimes they do, and sometimes they don't. The results you will find are inconclusive. Try it with any news report and any pair. Make an experiment out of it (record your results and take a lot of data).

The reason this is true is because the news is a market maker. What does that mean? The big traders who really control the markets know where they want to move the markets. What if these big traders want to lower prices but positive news is released? Good! They will sell all the shares that people are buying, getting better prices before moving price. What if big traders want to raise prices and positive news is released? Good! They can move up prices and start cashing out on shares. It took me years to realize that news really isn't news, but it was one of the more important conclusions I came to.

If you don't believe me that's fine. I urge you regardless to go to your charts and see for yourself if the news is tradable. Never take peoples' word when it comes to Forex. Verify everything by yourself and look for true understanding. That's the only way to become profitable in this business.

Best,
Forex Zen
  • #13
  • Feb 9, 2014 9:03pm Feb 9, 2014 9:03pm
Quoting yazzie
i like to Trade the News pressers like FOMC and ECB as this morning. The events last longer, there is tons of volatility due to all the Algos, and it creates a nice opportunity to scalp both long and short
Thats a very dangerous thing to do. I have seen individual trading well for months, and then go bust because they have decided to trade the FOMC. The volatilty during those period are too high. Be aware
  • #14
  • Mar 14, 2014 5:48pm Mar 14, 2014 5:48pm
ok, thanks for all your replies.

it probably is too risky and i would never use it as my main strategy.
but i think the AUD news are quite reliable. very rarely you see price going strong in one direction before turning.

maybe i should look into it
  • #15
  • Mar 16, 2014 12:38pm Mar 16, 2014 12:38pm
Quoting xForexZenx
Hey inad07, I've been trading Forex for a while now and can say with a resounding conclusion that the answer is "no." Go back on your charts and pick any major news event, let's say the NFP. Pick one USD pair, and drop down to the 15 minute chart (or better yet the 1 minute chart). Now, go back in time and look up NFP results, and see if they correlate with price movement. You'll find that they don't. Sometimes they do, and sometimes they don't. The results you will find are inconclusive. Try it with any news report and any pair. Make an experiment...
The reality is that no one -individuals or institutions- controls the Forex market. It can be manipulated but for a very very short period of time; from miliseconds to some hours at max, and requires collusion from many many institutions at the same time, so you can imagine the money involved to move the market a bit; see London Fix manipulation by FX dealers for more information.

Anyway, news releases are dominated by HFT (High Frequency Trading) algorithms, which receive the news information in electronical format, and react to it. This means they are usually pre-programed to act in a way or another; the thing is that the timeframe where algos trade are miliseconds; take a second and splice it in a thousand parts and you'll get the idea. This is the resolution of HFT algos. Thats why is very difficult to trade news, because machines are in clear tactical advantage and this is taken into account by dealers, banks, quant funds, etc in order trigger client stops, fake moves, open positions at better prices before making the real move, etc.

However, it is possible to trade high impact news events using stop orders to enter the market and at a considerable distance from pre-news price in order to avoid getting filled by HFT-due spikes, for example, 15-30 pips usually in liquid pairs. Of course you will get slippage as your order is not instanly filled as liquidity dries up, but you will probably be invested in a intraday runaway market most of the times.

In news releases, never trust the first price, and you'll be right like 70% of time.
  • #16
  • Mar 16, 2014 6:14pm Mar 16, 2014 6:14pm
Quoting Capelli
{quote} Thats a very dangerous thing to do. I have seen individual trading well for months, and then go bust because they have decided to trade the FOMC. The volatilty during those period are too high. Be aware
That is true for every system, especially the math based( pure technicals, charting)

If I switch to daily, weekly chart I see the trend reversals are at FOCM, FED, and maybe NFP.
Volatility is 150-250 pip max. So if you take a 250pip SL and you loose 1-3% only -depends on your system- (but not 30% ) than it could be fine imho.

If you take a 2% risk for 20 pip SL... it is funny, it is casino.
I want to buy PATIENCE
  • #17
  • Mar 16, 2014 9:51pm Mar 16, 2014 9:51pm
Quoting inad07
hi folks, i am just wondering whether taking trades once you see where the price is going after a news release (after 1-5 sec) is a good strategy? i've tried it three time successfully and having checked the last 20 big (red) news releases, only one time the price moved 10 pips up before going down. i know it is risky (spread, slippage...) but what do you think? best.
This sounds really risky, but tempting, very tempting...

Isn't that how "news trading" is done?

I heard there are also people who trade the NFP, and also some other employment reports.
  • #18
  • Mar 23, 2014 4:42am Mar 23, 2014 4:42am
I wouldn't trade all my lots right away, just a few..
  • #19
  • Mar 24, 2014 2:49am Mar 24, 2014 2:49am
most profit is when most risk
  • #20
  • Apr 1, 2014 12:11am Apr 1, 2014 12:11am
Quoting inad07
hi folks, i am just wondering whether taking trades once you see where the price is going after a news release (after 1-5 sec) is a good strategy? i've tried it three time successfully and having checked the last 20 big (red) news releases, only one time the price moved 10 pips up before going down. i know it is risky (spread, slippage...) but what do you think? best.
I'll wait them on S/R area, whether it is break or not. If it does break, i'll wait them on next S/R area. If it isnt, then i'll open up an opposite position.
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