News trading = Promised land? | Forex Factory

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News trading = Promised land?

  • #1
  • First Post: Aug 19, 2006 8:43pm Aug 19, 2006 8:43pm
Sometimes trading news can give you 50-100 pips in a matter of seconds, minutes.
Putting 2 orders, unsing oanda, getting filled, using a couple of lots, trading 1-2-3 times a month, making lots of money.

Is that simple?

Are you trading only news? How is that working for you? How long?

Are you trading news also? Are you more profitable trading news?
Try hard, think fast, die young
  • #2
  • Edited 10:59pm Aug 19, 2006 10:03pm | Edited 10:59pm
Quoting dof
Sometimes trading news can give you 50-100 pips in a matter of seconds, minutes.
Putting 2 orders, unsing oanda, getting filled, using a couple of lots, trading 1-2-3 times a month, making lots of money.

Is that simple?

Are you trading only news? How is that working for you? How long?

Are you trading news also? Are you more profitable trading news?
The Holy Grail system is one in which any mindless idiot can click a few buttons and become a millionaire in short order. From day one, you have been told by those in the know that it does not exist. Straddled news trading may seem like the Holy Grail at the moment, but I can promise you that it isn't.

I give it another month and all the **** *** ******* that straddle the news are going to get sent packing. With the flick of a button any retail broker can widen the spread to a point that trips both sides’ limits and stops. I saw a NFP once that had a 50pip spread on oanda live eur/usd. So you can play that game, but sometime very soon you’re going to get burned.

That having been said, I should note that it is still possible to trade the news consistently with little risk. It requires you to actually expend some effort to learn how to interpret the news and the market sentiment, but once you learn how, it's like owning a money machine.
  • #3
  • Aug 19, 2006 11:22pm Aug 19, 2006 11:22pm
dont you think that trading the news is getting to main stream? Not that it was a secret weapon or anything but lately it has gotten BIG.I mean the spreads on most brokers at news times are CRAZY. Are their any good brokers left to trade news with?


Rsq

By the way... I fell that to trade the news the right way, it takes a Great amount of knowlage and understanding on how news will react with the market. Much props..........
  • #4
  • Aug 19, 2006 11:47pm Aug 19, 2006 11:47pm
Quoting rsq955
dont you think that trading the news is getting to main stream? Not that it was a secret weapon or anything but lately it has gotten BIG.
This is precisely my point. It has become so big because now anyone with and index finger can trade the news via a straddle. It marks a prime opportunity for the market makers to rake in some extra profits...

Back on April 20, 06, spreads on silver exploded to 5000 pips. As a result several hundred traders saw their account balances drop into negative territory. The excuse Oanda gave was that liquidity had dried up and as a result they had to widen the spreads. So much money was made on this event that Oanda decided to be kind and restore all the traders with negative balances back to $1.

How many of the current crop of straddelers can sustain 50, 100, or even a 200 pip loss on each of 2 trades? My guess is not too many...


Quoting rsq955
By the way... I fell that to trade the news the right way, it takes a Great amount of knowlage and understanding on how news will react with the market. Much props..........
It does and they do deserve the props.
  • #5
  • Aug 20, 2006 7:12am Aug 20, 2006 7:12am
Quoting Darkstar
Look bro, no disrespect, but I can probably teach my dog to set two orders 30 seconds before a news announcement and collect a profit. It requires zero skill, zero thought, and as a result zero intelligence. Anyone who takes pride in their ability to make money that way must be setting the bar very low.
True, 2 order traders are not news traders, are just gamblers. There are some gamblers that are doing good.
Try hard, think fast, die young
  • #6
  • Aug 20, 2006 8:12am Aug 20, 2006 8:12am
Quoting Darkstar
This is precisely my point. It has become so big because now anyone with and index finger can trade the news via a straddle. It marks a prime opportunity for the market makers to rake in some extra profits...

Back on April 20, 06, spreads on silver exploded to 5000 pips. As a result several hundred traders saw their account balances drop into negative territory. The excuse Oanda gave was that liquidity had dried up and as a result they had to widen the spreads. So much money was made on this event that Oanda decided to be kind and restore all the traders with negative balances back to $1.

How many of the current crop of straddelers can sustain 50, 100, or even a 200 pip loss on each of 2 trades? My guess is not too many...


It does and they do deserve the props.

Having never actually seen a news release I'm curious as to how this works. Do the reports simply state the numbers upfront, like what we see on the calendar here? And if thats the case, isn't it a pretty cut and dry method of deciding if the price will go up or down? I mean, once you determine higher than expected numbers raise/lower the price for one news event, wont' that always be true?

Or is it more involved than that? Given the response time to news releases I would think that it would have to be that simple?

Jason
  • #7
  • Aug 20, 2006 8:27am Aug 20, 2006 8:27am
Quoting jlowder
Having never actually seen a news release I'm curious as to how this works. Do the reports simply state the numbers upfront, like what we see on the calendar here? And if thats the case, isn't it a pretty cut and dry method of deciding if the price will go up or down? I mean, once you determine higher than expected numbers raise/lower the price for one news event, wont' that always be true?

Or is it more involved than that? Given the response time to news releases I would think that it would have to be that simple?

Jason
It's more complicated, a couple of months ago (3-4) a lower than expected NFP made the dollar stronger .
Try hard, think fast, die young
  • #8
  • Aug 20, 2006 9:37am Aug 20, 2006 9:37am
Quoting jlowder
Having never actually seen a news release I'm curious as to how this works. Do the reports simply state the numbers upfront, like what we see on the calendar here? And if thats the case, isn't it a pretty cut and dry method of deciding if the price will go up or down? I mean, once you determine higher than expected numbers raise/lower the price for one news event, wont' that always be true?

Or is it more involved than that? Given the response time to news releases I would think that it would have to be that simple?

Jason
Event trading is much more involved then that. As was pointed out by dof, depending on how the numbers print in relation to expectations, the pair can treat the same miss in different ways. At one point, below consensus inflation numbers can indicate a moderating of inflation. At another it can mean a recession is brewing. Yet again it can mean nothing at all.

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To start with, an understanding of economics and the effort to track long strings of different data points are required to make the determination which is the case. Then a wealth of research needs to be dedicated to discovering how much of a number is actually priced in. It is rare that the “consensus” numbers are the ones the market is priced for and making that determination is complicated. Most of the data is anecdotal in nature (sentiment and feel) or messy (pre announcement order flow). All of the whipsaws you have ever seen are a result of pre-priced data. Unless you know this info, you’re in for a beating at some point.

<o> </o>

Then there is post announcement trade management. Tech analysis is useful, but a deep understanding of order flow is critical. You have to make certain assumptions about how much of the open interest has been pulled because of the data, where new interest will be growing, and ultimately how you should expect to position your own stops and take profits as a result. Classic trader rule #3 is “cut your losers and let your winners run” and it holds just as true for event trading as is does for trend systems. Someone may be content with a fixed 10-50 pip profit, but they are either leaving a fortune on the table or needlessly risking all they have made. Numerous 2, 3, and 400 pip moves have been sparked by a single news event this year alone…

<o> </o>

News trading is ridiculously profitable if you know what you’re doing. What disturbs me is that the current crop of event traders all think this can be distilled down to a simple 2 order bracket system. The current sentiment is that brokers and market makers are all stupid. Consensus says they are quite content to allow every Joe to extract millions from their pockets with little effort. Unfortunately sometime soon the hammer will drop and the forum will be running red with blood. It should never be forgotten that we are trading against a group of professionals that only get paid when we lose money. They have been at this game a long time and know how to lull the foolish into complacency. Once the leverage begins to tick higher (which it no doubt is currently) a little price or spread manipulation will recover all they have lost and a windfall profit as well.
  • #9
  • Aug 20, 2006 11:08am Aug 20, 2006 11:08am
Quoting Darkstar
The Holy Grail system is one in which any mindless idiot can click a few buttons and become a millionaire in short order. From day one, you have been told by those in the know that it does not exist. Straddled news trading may seem like the Holy Grail at the moment, but I can promise you that it isn't.

I give it another month and all the **** *** ******* that straddle the news are going to get sent packing. With the flick of a button any retail broker can widen the spread to a point that trips both sides’ limits and stops. I saw a NFP once that had a 50pip spread on oanda live eur/usd. So you can play that game, but sometime very soon you’re going to get burned.

That having been said, I should note that it is still possible to trade the news consistently with little risk. It requires you to actually expend some effort to learn how to interpret the news and the market sentiment, but once you learn how, it's like owning a money machine.
Dark,

If it's possible to agree and disagree with this post, that's clearly the camp that I sit in.

First of all, lazy isn't exactly what I would use to classify someone who clearly understands that there is an opportunity in trading events as such. I know what you're trying to say...that you prefer the difficult work of understanding the market to make money as opposed to people who just shotgun orders and claim they know what the hell they're doing.

So, I totally agree with what you're saying on that front...straddling now may be an opportunity, but as the spreads prior to release widen, less traders will find those opportunities worth the effort. That will inevitably weed out the real traders from the "lazy" ones. The real traders will adapt and move on to something else profitable. The lazy ones will complain about their brokers on this forum and tout all sorts of conspiracy theories.

However, as Money pointed out, it's could be construed as a bit offensive to those of us who might find opportunity in doing what's easy now...but it doesn't make us lazy, it makes us intelligent...if it's easy, why not do it? Trust me, Dark...when the time comes to adapt, the intelligent ones will figure it out LONG before it becomes a money-loser...and you, will be slightly vindicated.

Folks, if you take away anything from this thread (other than the fact that Dark clearly is into tough love...no offense Dark, I'm totally with you on that!) it is that opportunity today is goat dung tomorrow...so enjoy the straddle when you can...however, come election year (like this year maybe?) NFP will whipsaw, trigger both your stop entries and both your stop losses. Right now, we happen to be in a predictive cycle where-by news tends to be one directional at release...trust me (and Dark), there will be a time when the common theme of the news release will be a 50 pip spike up and a 100 pip spike down (in seconds) where by you will be holding a loss the difference between your straddle, which you MAY or MAY NOT be able to recover from the rest of the news day if you're lucky enough to be able to dump your losing position...so, the point is...ya'll need to do some research and understand the effect of the news and truly understand why the price spikes...if you just leave it to chance, the inevitable whipsaw will leave you not only scratching your heads, but wondering what happened to your account.
  • #10
  • Aug 20, 2006 11:59am Aug 20, 2006 11:59am
A real trader will allways make money, news, events, technical, whatever.

Like in any other bussiness, survival of the best.
Try hard, think fast, die young
  • #11
  • Aug 20, 2006 12:09pm Aug 20, 2006 12:09pm
ughh yet another new trading thread, so i'll keep it short and simple:

the trick to trading the news is not JUST about the straddle or slippage or lighting fast reflexes and a superduper fast news service.

infact its about none of that.

the trick is knowing when to trade, or should i say, knowing when not to trade.

knowing when not to do something is where the experience comes into play.

non-news traders utilise their experience and knowledge of their systems and indicators.

news traders utilise their experience and knowledge of the reactions of market participants.

its that simple, and its that hard.
ps, it certainly aint the promised land, otherwise i woulda put my dog in charge of my PC while i tan by the pool
  • #12
  • Aug 20, 2006 12:17pm Aug 20, 2006 12:17pm
Quoting sknk
otherwise i woulda put my dog in charge of my PC while i tan by the pool
Times are gonna change soon, and after few losing streaks,traders will be before PC and their dogs will be tanning by the pool.
  • #13
  • Aug 20, 2006 12:36pm Aug 20, 2006 12:36pm
trading the news is a profitable way to trade, for sure. i do it, and i know a few others personally who make a fortune trading news. but it is not easy by any means. to think you can throw a straddle up and make money is like thinking you can simply go long when 2MAs cross.

there is a lot to trading news. imo you need to know the technicals AND the fundamentals to successfully trade news. and fundamentals take years to learn. by only looking at the chart its hard to draw conclusions from the price action. a simple example of this is the consumer sentiment report that came out friday (see http://www.forexfactory.com/forexfor...ead.php?t=7189). if you didnt know the fundamentals (ie the fact that the consumer sentiment report is not highly regarded amoung investors), you might have gone long on the spike, when in fact the news should have been faded! the fundies and techies together give you insight to the price action that is very valuable!
Relax and be happy.
  • #14
  • Aug 20, 2006 12:47pm Aug 20, 2006 12:47pm
Quoting kolachi
Times are gonna change soon, and after few losing streaks,traders will be before PC and their dogs will be tanning by the pool.
lol agreed!

if you dont know what youre doing chances are you wont have a PC to sit infront of either, and the dog will be the next thing up for sale on ebay :
  • #15
  • Aug 20, 2006 12:56pm Aug 20, 2006 12:56pm
Quoting merlin
trading the news is a profitable way to trade, for sure. i do it, and i know a few others personally who make a fortune trading news. but it is not easy by any means. to think you can throw a straddle up and make money is like thinking you can simply go long when 2MAs cross.

there is a lot to trading news. imo you need to know the technicals AND the fundamentals to successfully trade news. and fundamentals take years to learn. by only looking at the chart its hard to draw conclusions from the price action. a simple example of this is the consumer sentiment report that came out friday (see http://www.forexfactory.com/forexfor...ead.php?t=7189). if you didnt know the fundamentals (ie the fact that the consumer sentiment report is not highly regarded amoung investors), you might have gone long on the spike, when in fact the news should have been faded! the fundies and techies together give you insight to the price action that is very valuable!
Absolutely agreed.
This is my point which I want the newbies should know.Fundamental trading is not an easyone.What I enjoy is that newbies are coming in forex and in next few days they are trading news.I still do not feel myself comfortablein properly understanding the fundamentals.
  • #16
  • Aug 20, 2006 1:08pm Aug 20, 2006 1:08pm
Quoting merlin
trading the news is a profitable way to trade, for sure. i do it, and i know a few others personally who make a fortune trading news. but it is not easy by any means. to think you can throw a straddle up and make money is like thinking you can simply go long when 2MAs cross.

there is a lot to trading news. imo you need to know the technicals AND the fundamentals to successfully trade news. and fundamentals take years to learn. by only looking at the chart its hard to draw conclusions from the price action. a simple example of this is the consumer sentiment report that came out friday (see http://www.forexfactory.com/forexfor...ead.php?t=7189). if you didnt know the fundamentals (ie the fact that the consumer sentiment report is not highly regarded amoung investors), you might have gone long on the spike, when in fact the news should have been faded! the fundies and techies together give you insight to the price action that is very valuable!
Yeah but Merlin, you gotta admit, it doesn't take as long to read between the lines of Bernie Bull**** and GreenSpeak.

Perhaps a factor in the huge upswell of "T the N"
[other than the fact that a thread was opened @ FF of course]
  • #17
  • Aug 20, 2006 1:15pm Aug 20, 2006 1:15pm
Quoting Darkstar
The Holy Grail system is one in which any mindless idiot can click a few buttons and become a millionaire in short order. From day one, you have been told by those in the know that it does not exist. Straddled news trading may seem like the Holy Grail at the moment, but I can promise you that it isn't.

I give it another month and all the **** *** ******* that straddle the news are going to get sent packing. With the flick of a button any retail broker can widen the spread to a point that trips both sides’ limits and stops. I saw a NFP once that had a 50pip spread on oanda live eur/usd. So you can play that game, but sometime very soon you’re going to get burned.

That having been said, I should note that it is still possible to trade the news consistently with little risk. It requires you to actually expend some effort to learn how to interpret the news and the market sentiment, but once you learn how, it's like owning a money machine.
Wise words. I noticed a situation this week where on the news, my brokers quote was off 25+ pips from what the quote was on my demo account during the heat of the news feed. It wasn't in the traders favor BTW .

I have noticed that in the 1hr to 15 minutes before the news the price usually creeps in the direction of the news move. I quantified that enough to try to trade it though.
  • #18
  • Aug 20, 2006 1:27pm Aug 20, 2006 1:27pm
Some of the old far#'s around here might agree that it used to be you could Fade the initial spike which usually occurred ~ 1-2 min Before the News.

It was my belief that the Big In The Know Guys would initially run it the opposite way with 10% or so of their normal Lot Size to get the Cannon Fodder IN then turn the jets to full power and sweep the floor with the rookies as they reversed their position 1100%.

Make sure your lifeboat has no holes before you try to board the Titanic.
  • #19
  • Aug 20, 2006 1:29pm Aug 20, 2006 1:29pm
Quoting Bemac
Some of the old far#'s around here might agree that it used to be you could Fade the initial spike which usually occurred ~ 1-2 min Before the News.

It was my belief that the Big In The Know Guys would initially run it the opposite way with 10% or so of their normal Lot Size to get the Cannon Fodder IN then turn the jets to full power and sweep the floor with the rookies as they reversed their position 1100%.

Make sure your lifeboat has no holes before you try to board the Titanic.
Looking at the price action before the announcement, when the big guys are positioning themselves is an interesting exercise.
  • #20
  • Aug 20, 2006 6:55pm Aug 20, 2006 6:55pm
I think that I just have to say this.

Long term success comes in many ways. (Not just your way)

I think that with the news events, it is EASY to get in to the trade. And quite frankly I don't care how you do it.

Your success will come with how you manage your trade!!!! This is where we either make it or lose it.

I know many successful news traders that still have losing streaks. Whipsaws will get us all at one time or another. Bad decisions happen on occasion. Minimizing these losses when they happen is the key. For example, I have had trades go bad on me, but I have the courage to bring my trade to a breakeven before the turn of a minute candle. I MANAGE my trade to minimize loss.

I DON'T CARE HOW YOU GET INTO THE TRADE. THAT IS THE EASY PART.

Minimize loss!! Maximize profit!!

So, how about instead of arguing the point of who is a REAL news trader, or who is just a gambler, why don't we help each other learn to manage our trades so that we all win!!

Thanks

DC
"There is MORE Happiness in giving than receiving"
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