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How news affects trend trading

  • #1
  • First Post: Jul 28, 2006 8:39am Jul 28, 2006 8:39am
Ok, so I'm looking at the charts this morning and having gotten up a bit late I missed the GDP news spike. From the evening before I was following a 4 hour method that had prices dropping. The news completely changed that in an instant.

There are a lot of news items each month that have the potential to derail "trend" trades - at least under the 1 day period.

So what do you do to compensate for this? Do you keep exiting trades before a news event? Do you ride it out in the hopes that it will return in the original direction? Do you hedge your trade right before a news event?

I'm curious to know what processes people use in these cases.

Jason
  • #2
  • Jul 28, 2006 8:45am Jul 28, 2006 8:45am
Quoting jlowder
Ok, so I'm looking at the charts this morning and having gotten up a bit late I missed the GDP news spike. From the evening before I was following a 4 hour method that had prices dropping. The news completely changed that in an instant.

There are a lot of news items each month that have the potential to derail "trend" trades - at least under the 1 day period.

So what do you do to compensate for this? Do you keep exiting trades before a news event? Do you ride it out in the hopes that it will return in the original direction? Do you hedge your trade right before a news event?

I'm curious to know what processes people use in these cases.

Jason
You shouldn't miss something like this.
I close everything that I have open on a chart with a timeframe smaller than 1 day. I oly trade 15-4h so...
Nobody can predict what the news will be, and nobody can predict how the price will go. I think... If somebody can, I don't think it will tell us.
Good luck.
Try hard, think fast, die young
  • #3
  • Jul 28, 2006 9:50am Jul 28, 2006 9:50am
Quoting dof
You shouldn't miss something like this.
I close everything that I have open on a chart with a timeframe smaller than 1 day. I oly trade 15-4h so...
Nobody can predict what the news will be, and nobody can predict how the price will go. I think... If somebody can, I don't think it will tell us.
Good luck.
So if you're trading the cable that means you watch not only for news events that happen across the pond, but also events for correlated pairs such as the EUR/USD? Has it been your experience that only the "red" news events make an impact or have you just created a list over time?

Thanks.

J
  • #4
  • Jul 28, 2006 9:58am Jul 28, 2006 9:58am
Quoting jlowder
So if you're trading the cable that means you watch not only for news events that happen across the pond, but also events for correlated pairs such as the EUR/USD? Has it been your experience that only the "red" news events make an impact or have you just created a list over time?

Thanks.

J
A list over time. I'm still buulding the list. There are some events that are not rated with red on FF but they can create big moves.
I trade gbp/usd only and I watch for news for gbp and for usd.
I have also a tehnical strategy, but when the news comes... it's all about the news .
I'm not an expert in news, there are people here that trade only news. They can tell you more.
Try hard, think fast, die young
  • #5
  • Jul 28, 2006 10:05am Jul 28, 2006 10:05am
There are things on my Absolute Fibonacci Framework that indicated that the GBP would spike as it did, and that over the next few days it may continue up. Without going into an impossible amount of detail for a thread like this, it is fitting exactly to one particular fractal on the framework at the moment.

We had confirmations of this at points 1, 2, 3, 4, 5, 6, and 7. Another fractal suggested an upward move, so the logical place for it to visit this morning was 8.
Attached Image
The framework is there; we just have to work on our frame of mind.
  • #6
  • Jul 28, 2006 10:06am Jul 28, 2006 10:06am
Quoting jlowder
So if you're trading the cable that means you watch not only for news events that happen across the pond, but also events for correlated pairs such as the EUR/USD? Has it been your experience that only the "red" news events make an impact or have you just created a list over time?

Thanks.

J
Yes, yes and no. The "no" is watch especially all orange and red news events;however, the yellow events can impact as well. If you are in a profitable position prior to a news release, I recommend tightening your stop loss, the news may have no impact or positive impact. If you exit your position every time a news release comes out....... it seems like the spread fees would really add up over time.

But, I'm a noob.... so beware of anything I say.
sw
  • #7
  • Edited 11:44am Jul 28, 2006 10:48am | Edited 11:44am
Quoting squat1962
Yes, yes and no. The "no" is watch especially all orange and red news events;however, the yellow events can impact as well. If you are in a profitable position prior to a news release, I recommend tightening your stop loss, the news may have no impact or positive impact. If you exit your position every time a news release comes out....... it seems like the spread fees would really add up over time.

But, I'm a noob.... so beware of anything I say.
sw
Not closing it gambling. You can pay much more on slippage or other things than spread.
Keeping it open beased on a strategy is a different thing. Keeping it open because it might not affect you... it's bad.
Try hard, think fast, die young
  • #8
  • Jul 28, 2006 11:42am Jul 28, 2006 11:42am
I close all my trades before the critical news.

Pablo.
Pablo
  • #9
  • Jul 28, 2006 5:10pm Jul 28, 2006 5:10pm
Quoting niceguy777
There are things on my Absolute Fibonacci Framework that indicated that the GBP would spike as it did, and that over the next few days it may continue up. Without going into an impossible amount of detail for a thread like this, it is fitting exactly to one particular fractal on the framework at the moment.

We had confirmations of this at points 1, 2, 3, 4, 5, 6, and 7. Another fractal suggested an upward move, so the logical place for it to visit this morning was 8.
I also see a double top formation. It could've gone down too. And do you really think it moved not cuz of the news? What if the numbers came out way better than expected? Would it have still moved as it did?... I doubt it.
  • #10
  • Jul 28, 2006 6:19pm Jul 28, 2006 6:19pm
Quoting blueshift
I also see a double top formation. It could've gone down too. And do you really think it moved not cuz of the news? What if the numbers came out way better than expected? Would it have still moved as it did?... I doubt it.
As I said, it's a bit difficult to show the whole explanation here, as more than one chart was involved.

Whether it moved because of the news or not doesn't really concern me, as long as I know where it's going. I don't like to deal in conjecture either. I don't see the point. The news came out as it came out, with the result that we saw, and that coincided with the move that seemed logical based on the methodology employed in applying the Framework to trades.
The framework is there; we just have to work on our frame of mind.
  • #11
  • Jul 28, 2006 6:28pm Jul 28, 2006 6:28pm
it is nealy 95% correct like the fact , so i still keep my long position !
  • #12
  • Jul 30, 2006 4:02pm Jul 30, 2006 4:02pm
Quoting jlowder
Ok, so I'm looking at the charts this morning and having gotten up a bit late I missed the GDP news spike. From the evening before I was following a 4 hour method that had prices dropping. The news completely changed that in an instant.

There are a lot of news items each month that have the potential to derail "trend" trades - at least under the 1 day period.

So what do you do to compensate for this? Do you keep exiting trades before a news event? Do you ride it out in the hopes that it will return in the original direction? Do you hedge your trade right before a news event?

I'm curious to know what processes people use in these cases.

Jason
jlowder,

I leave my positions open during new releases. But, I'm a long term trader and only trade from the daily charts. Depending on my position, I may move my stop to make sure a get some profit if the price turns against me. I'm usually well into my positions before or after news ...

Happy Trading
If it is not broken, fix it until it is!
  • #13
  • Last Post: Aug 20, 2008 4:40am Aug 20, 2008 4:40am
Look , let's say market is down in D1 , there is no where you see bulls on D1 , then there is a new , things go up in the minor time-frames , then it tends to go down again
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