News Trading (again)!

Hi everyone,

A lot of discussion was around the "box play". For those of you just joining us it’s when you "trap" in the current price with limit orders 10-however many pips away you feel like placing them. So if the price reacts to the news by going up, you’re in, and vice a versa.

Here's the problem as many have noted: Slippage is a major issue and there's no way a broker can react fast enough to get you in that price in an extremely volatile situation. For instance, the last time the nonfarm was released the price of EUR/USD went through the roof by about 100 pips in literally a matter of one second. Slippage? No way?!
And if you did take a fill going long at a much higher price you would have been disappointed because the next second the price started dropping as a reaction to the huge spike.................

Every thread may end up with to much posts, but that's not a reason to forget it because it will go to the end of the list and usefull information will be lost.

I think buy/sell order are the same as Stop loss or take profit. It's just an order to buy or to sell and if there is liquidity it will be executed. So to me it seams it's the same thing.

I remember one day a month or two ago when silver droped 30% in a couple of seconds. I was long and I had a stop loss. It wasn't executed. My account ended with negative balance. The broker was Oanda. They had credited every account in that situation with 1$. They have took some lost, or maybe they didn't. They are the ones who know.

So, I don't think there is such thing as secure stop loss because it's up to the existance of liquidity.

About the thread, I think we should stick with the old one because it contains many great posts.

i know this strategy. I'm just a little scared of getting 'filled' at the wrong bid/ask price
Which broker you suggest for this style?

where is the old thread located @?

http://www.forexfactory.com/forexfor...ead.php?t=4734

I dont mean to discredit any of the previous posts. Yes, there are some excellent ideas floating around this site.

In regards to the stop loss situation, Oanda I've heard many things about, and they are still a small shop with limited resources. Also, Oanda is FX, not futures?...little confused there.

Either way, if your positions are perfectly hedged, even IF you stop loss is not executed in the manner I described, you wont lose anything more than a spread worst case scenario.

What I discussed here I use as a whole system, if you want to call it that, not broken into pieces.

Your liquidity rebuttle makes sense from a big picture perspective, however, from my experience this hasn't been the case.

You might want to try Deutsche Bank FX, or something of the nature which provides high reliability and great customer service. Also, speaking with your broker's dealing desk will give you a good measure of how reliable they really are.

Bottom line: you are entering a highly volatile and risky situation; get the best support on your side.

Happy lucrative trading,
BillyRayValentine

Is there a site with a good read-up on all the important news events, normal pip range for the reaction etc for a newbie like me?

For example, I see the GDP Deflator+GDP Advance on the calendar, but I don't understand what the predicted, previous values translate to -- higher EURUSD?

Don't flame the newbie

Regards,
Divya

On page 58 of Kathy Lien's "Day Trading the Currency Market" she provides a nice table of average pip ranges for major economic releases.

Bloomberg's economic calendar:

http://www.bloomberg.com/markets/ecalendar/index.html

gives excellent descriptions as to the significance, meaning and impact of the releases.

Hope this helps.

Happy lucrative trading,
BillyRayValentine

Hi Billy Ray,

Thanks for posting your strategy. It seems to avoid some of the pitfalls of straddling, as you say. Just a few questions. What broker are you using? I know there are brokers like FXsol that allow you to hedge. Is what you're doing any different? Also, how do you avoid stop losses? One of your positions will get stopped out, right? Later on, you do say that you put in a stop loss, so that seems to contradict the earlier statement.

Is NOT always good trading news..

yesterday i palyed nzd-usd...for the trade balance.
I put 10 lots order at 0,6231...it jumps to 0,6241...then went back..and I decided to close at 0,6236 as wasnt going more in that moment...
surprise! instead of having 500$ gain as expected, I see I have -500 $ ???
Result, my buy order was executed at 0,6241....
Im complaining with the broker, but seems to be the say 'slipperage...'...

great!

Hello BillyRayValentine,

Its funny that you should post this. Just yesterday when the CPI numbers for the AUD were released at 9:30PM EST i had 2 positions open, one EUR/AUD (lost) and the other AUD/USD. Both had appropriate stop losses relative to spread. Both with open tops (no take profit set)

Needless to say when the numbers came out and the Aussie coin shot up the EUR/AUD stoped out. I managed to come on top by several pips. Not much but I was vey happy to pull it off and come out ahead. Specially when my broker hits me for 15pips on the EUR/AUD! Yeah, im a newbie.. but im a quick study ..

I only have one account just opened 2 positions.

You are also correct in pointing out this seems to be a strategy that is only good when a large shift is almost certain in one direction or another.

Hi everyone and thanks for the replys.

NYCTRADER:
I use Deutsche Bank. They allow me to have 2 sub accounts under 1 trader ID, and the two are margined together (so if I were to go in call in one for instance, the collateral in the other keeps any positions I have alive). The problem with Deutsche for many starting out is that minimum account size is 10,000.00 USD. About the only other retail broker out there I know that you can do this with and allows a small account size is CMS, but they, unlike Deutsche are a smaller shop.

One thing that's very important with execution on any order is access to pure liquidity. Many of the retail brokers out there are simply middle men to the source, such as a bank like Deutsche. They lack the depth and liquidity that will allow them to initiate the orders you want when you want. Some will claim to be linked directly to the bank, like Oanda, but they're still acting as middlemen regardless. They're spreads are adjusted according to a skewed average that is usually inaccurate in highly volatile situations.

As far as the strategy goes, yes, I'm essentially taking a loss on one position to gain on another, and need the other to recouperate the loss of the dud before I turn a profit. But average results indicate that being in the positions beforehand rather than hoping to get orders filled at a set price increase profitability plain and simple.

And not too sure what you mean reagrding the second stop loss...what I meant was to simply adjust it in the direction of your winning position to protect profits and just in case the price suddenly hurls in the opposite direction.

Test it out and let me know what you think.

TRUCCO:
No, trading the news is not always good! I stay away from speeches (market reactions act very indecisively to key phrases oftentimes, jerking the price back and forth...people interpreting statements differently) and other situations where a medium or indecisive volatility is expected. I look for a solid 1 number release with a lot of impact. And sometimes market makers jack the price way up before it comes plummetting down, the nature of the beast. Thats why its important to be on your toes and adjust stop losses and be ready to reverse with a market order.

HALCYON:
Glad you pointed this out. If you cant open 2 accounts somewhere, then you could go long on one currency pair and short on another that have a very high correllation (ie EUR/USD and GBP/USD). And careful w/ the spreads...sorry to hear that, especially on the exotic currencies.

Happy lucrative trading,
BillyRayValentine

you mean stop orders, right?

an easy to remember way to tell the difference (that i learned here on tihs forum)...

stop orders fill you at a worse price than the current price, limit orders fill you at a better price than the current price. limit = better, stop = worse.

Hi Merlin,

Actually I meant stop loss. This "method" puts you already in the market perfectly hedged and closes whichever postion going against the market.

No limit or stop orders involved.

Generally speaking, brokers are, or should be able to initiate stop losses far more successfully than any order in a highly volative situation. If not, then they aren't too reliable...sorry to offend anybody of you don't find this the case, but I suggest finding another broker if it isn't.

There's a lot of poor executers out there, and some of the big retail ones top the list.

but you are "trapping" with stop orders, not limit orders, right?

all orders are either a stop or a limit. like i said, if the order price is better than the current price its a limit.

Yes. right the first time. They are far more secure than orders.

Thanks BillyRay!

Hi Billy,

Do you know of a free site that displays the actual figures after the news is released.

The only ones I know take hours to display them, is there one that puts them up after 15-20 mins

Thanks

Macca

I haven't got enough posts to say names here, but I recommend you to download the demo of a trading platform with free newsfeeds. You'll get practically instant information on major news releases.

So does anyone know which trading platform it is?
hurvinek,
or maybe you can PM me the platform. I'm interested to know.
Thanks