Avoiding news affecting one currency by trading another

Hello fellow traders!

Lets say tomorrow are some important news for the EUR. Why trade the EURUSD tomorrow at all and instead focus on a Yen- pair? There is much less stress in this approach, because there is no need to watch the time constantly.

I am a scalper myself and always stop one hour before the news and continue one hour later. On NFP days I dont trade at all. I still will not trade on NFP days, because they are rare. But the regular important news can in my opinion be avoided by switching pairs.

What do you think?

Yes and no.
If there is red news on EUR, USD or JPY, you should avoid trading all currencies because those three can have a wide impact.

If there is news on any other currency, you can simply avoid pairs that contain that currency.

First we are in August. The month where the billionaire are in vacation and don't trade and the small traders just looking at the charts and open a position like other months and wondering why isn't working now. In this month are blown up the most small trader accounts!

If we wouldn't be in August: lets say is an important news for EUR. Fore sure EUR/JPY will move if the news has a value. Lets say it comes a super good news for EUR.
EUR/JPY will move up a lot, for sure will move EUR/USD too a lot. The daily 3 trillion dollar trades a major part will be on this trades, so, the other has less trades.
Besides EUR is heavy up ( a few years ago some countries from Asia bought Portugal bonds as I remember) those who has usd and jpy will sell it to buy euro. Hence the USD/JPY is shaked randomly.
EUR has some convergence too.
You will have some better statistics, but just an example -as how I remmeber:
- EUR/USD has a fowvard convergence with 70% of GBP/USD, so you can expect GBP/JPY up
- EUR/USd has an reverse convergence with USD/CHF (which will be down). So the CHF/JPY will be up

So, you are affected on other majors if a major has a news.

Since is august: why don't you read a book about trading, personal skill development, psychology or enjoy the sunshine instead of pee on face of wind?



edit:
"correlation" is the correct keyword instead of "convergence"
Example : http://fxtrade.oanda.com/analysis/currency-correlation

Trading news has some tricks. 1. Never chase price spikes! 2. wait for price to come to your pre-marked level.
Never trade pre-news... Have areas of good risk reward marked to incase news does push price into a great support/resistance level.. (use 30m charts minimum to mark the levels at a news event). Never ever chase a news spike, fastest way to lose in forex! Avoid NFP, FOMC, and interest rate decisions unless your super fast and good, but best to sit those out. Its mentally hard to short a big green candle price spike, but it pays well. Market ranges more then it trends... So odds are highly in your favor to short spikes rather then chase them.

Dimi,
I don't quite agree with your explanation.
There would not be red news on AUD/USD. News affects a currency, not a pair.
If there is red news on AUD, I would simply avoid any pair that contained the AUD.
If the news is on USD, I would avoid all pairs.
I would also avoid all pairs if there is red news on EUR or JPY.
On any currency other than USD, EUR or JPY, I would simply avoid pairs that contained THAT currency.

Oh by the way:
After years of failing and wiping accounts the simple, not news based trades doesn't give me enough adrenaline, it is booooring (is is profitable, but not fun at all)
Only the news trading gives some adrenaline, because:
- at the news time the spread on a real ECN ( and not a fake ECN) will wipe. It will wipe a lot. Instead of spread + commission = 1.0-1.5 pip I will have 5-10 pip spread.
- execution: what I see at my PC it is maybe a 1 second ago displayed price at the market. I need 1 second to do a click and my broker find my trade match and execute it. That is 5-10 pip in my favor or against me. I have started a trade many times with 20 pip difference from what I wanted... and with -10 pip loss.
- SL or no SL and where to put it? - sometimes is a spike up then go down, sometimes is up and never goes back to BE, other times is up and down to BE - maybe the next day ( like Jul 31 now)
- there is a thread, where 100 usd was made 10k usd using 1:500 leverage. I think it is possible only in news ( using floating profits + scripts, because manual is to slow).

I wouldn't recommend to anyone to trade the news spike , ticks, who is at the beginning of his trading carrier with real money + there are to many other opportunities to trade. The demo account is very - VERY different from a real one: no lag, no widen spreads... no emotions.

Simple and boring and profitable trading:
Open a daily chart on a wide monitor. See there 50 candles at least.
If the left side price is a lot less then the right side price and has no major waves : not a lot lower then the lowest and not higher then the highest, then that pair is trending. If is trending, just enter at market with half position in trend direction and add the second half at the support / resistance.


Not need any effort to trade this pair:


For sure you can make +10% / month of your capital. But not fun

The widening of the difference between ask and bid does not concern me, because nobody should enter the market at this point. If you do it, you know that the spread will eat your balance. So, the entry should happen before the news, but now comes the question: What pip distance between entry price and current price (before news) is enough to protect from a negative slippage? The hitting of the StopLoss does not bother me, because that is the risk I am willing to take. The problem could be a massive negative slippage.

I think it depends on the liquidity of the pair, but it can also happen on the EURUSD. So my main concern is about open trades and if there is enough pip space to protect from negative slippage. If my target is 20 pips, and I have 15 and 5 to go, should I stay in to get the last 5 pips or should I exit and take the 15 pips, thats my main concern.

I respect high timeframe traders, but I am a scalper. Using high timeframes to avoid News is okay, but its not my style of trading.

Im sorry My friend, i Disagree. Fundamental news gives pretty sweet gigs. Good trading decisions are always based upon good information - information that is accurate, significant, and timely. But it can be difficult to trade on news. News does drive the currency market in the short term, and the Internet has irreversibly altered the presentation of corporate news and financial reports. Traders can now get immediate access to real-time news services, and those with both the time and inclination can closely monitor the news that is expected to have a significant effect on currency prices.

Yes I also do not trade during before and after big impact news like NFP. To me trading news is just like gambling. But if you have excellent fundamental knowledge, that's different. Just by assuming or listening from different news taking a decision is foolishness. Actually most newbie trade during news time because of the fear of missing an opportunity.