Trading off of news

I was wondering if any of you just wait for jobless claims,housing report etc... the last 2 weeks I just listened to the live results, hit my buy or sell and took a quick 35 pips within seconds. Today for instance the jobless claims came in at 8:30 am est. They estimated 465,000 and results came out 455,000 ? or close to that, I just know the number was lower than expected so i hit buy. Last week it was the housing market, few days ago consumer confidence, all with the same results. It seems too easy, whats the deal?? actualy on all of those I got out at 35 pips, and would of made much more, just because I am not confident in it yet, then after reports, I go to my usual system. Just that when I hear one of these reports coming out, Im on stand bye. Am I missing something? cant be this easy.....??

You're right, it isn't that easy.

News trading the way you describe is not practical for a serious retail trader.

Are you trading for small sums with an SB company?

Yes I am playing small sums, 2 contracts ($20) , I just have done this 3 times and it has worked the three times, not my trading strategy, but something I will do if those numbers come out and I hear them live. If its not practical for serious retailer traders, wouldnt it be practical for us small guys? thanks for the response.

emmanuel forozis said:

Yes I am playing small sums, 2 contracts ($20) , I just have done this 3 times and it has worked the three times, not my trading strategy, but something I will do if those numbers come out and I hear them live. If its not practical for serious retailer traders, wouldnt it be practical for us small guys? thanks for the response.

Click to expand...

You'll have problems with slippage, getting filled, wider spreads, whipsaws, you'll always get the news late so on and so on.

Thanks Bandit, guess I was lucky, good info, I thought it was too easy.

Yeah, they don't like it if you get good trading the news because they can't do anything about it but give you money... not a way to run a business!

emmanuel forozis said:

I was wondering if any of you just wait for jobless claims,housing report etc... the last 2 weeks I just listened to the live results, hit my buy or sell and took a quick 35 pips within seconds. Today for instance the jobless claims came in at 8:30 am est. They estimated 465,000 and results came out 455,000 ? or close to that, I just know the number was lower than expected so i hit buy. Last week it was the housing market, few days ago consumer confidence, all with the same results. It seems too easy, whats the deal?? actualy on all of those I got out at 35 pips, and would of made much more, just because I am not confident in it yet, then after reports, I go to my usual system. Just that when I hear one of these reports coming out, Im on stand bye. Am I missing something? cant be this easy.....??

Click to expand...

I love this post. On so many levels it's just ace. Carry on making a tw@t out of all us hard core technical guys buddy..sometimes I reckon we can't see the wood for the trees.

emmanuel forozis said:

Yes I am playing small sums, 2 contracts ($20) , I just have done this 3 times and it has worked the three times, not my trading strategy, but something I will do if those numbers come out and I hear them live. If its not practical for serious retailer traders, wouldnt it be practical for us small guys? thanks for the response.

Click to expand...

Was that on a demo account? If it was then its misleading and trading live will not be the same.

Plenty of traders trade the news, its not easy but it can be done. For instance at 1.30pm yesterday unemployment claims and final GDP both came in better than expected, just as it was announced price shot up to about 1142 if my memory is right. It then continued up to resistance at 1144 where it stalled for a while before heading right up to 1153.

There are a few problems though, firstly you need a proper squawk service, Bloomberg TV or Forexfactory are too slow, Bloomberg is about 10 seconds later than squawk any time I compared the two, that's a lifetime for news trading. Secondly forget about trying it with spreadbetting or retail forex. The only way to go is direct market access (the above example is the e mini S&P futures contract).

I only trade news that is quite far away from the expected number, for instance if unemployment claims is 1000 less than expected I wont touch it, if its 20,000 or 30,000 away from expectations then I might. I also ignore anything that is not important like Italian GDP as that doesn't seem to move the market.

I only trade news announcements, on S&P eminis, and I have maintained quite a good win ratio, albeit since I only started in May. In September I won 10 out of 12 trades, making 107% ROI on the contracts I traded. I use a to-the-second news server. I deal with slippage by limiting my market order, but often miss out on trades that would have been winners (probably missed about an additional 4 in Sep.) I only get into a trade if I'm really 'sure' - if there is such a thing. I.e. if the news is way off consensus, which it most often is, I have found. Unemployment Claims is one of my favourites, because I have a high win ratio on that and it is every week. I'm looking forward to ISM Manufacturing PMI today, which I usually find is a good one for me as well.

Good comments everyone, about a half hour ago, I got in hearing the michigan consensus, market didnt react much so I sold and lost 7 points including 4 pt spread, I waited for the isn manufacturing 54.5 vs 56.3 prior came in at 54.3 a tad lower, hit sell made 35 pips. It did go up "shake and bake" 8 pips before the dive, but I noticed 75% of the time it usualy does that when numbers are close, but always seems to follow the numbers up or down, until market settles. This time I did it on demo, since my fear factor, but all the others were on live account. the Demo does seem to get a faster fill.

The Infinity Futures AT Demo platform is designed to make it 'harder' than their live platform. I.e. the market has to move a tic past your entry point to get filled in the demo, but in reality you will usually get filled at your price to the tic.

I made 1 point off this afternoon's PMI announcement (made 1.5, then lost a half).

emmanuel forozis said:

Good comments everyone, about a half hour ago, I got in hearing the michigan consensus, market didnt react much so I sold and lost 7 points including 4 pt spread, I waited for the isn manufacturing 54.5 vs 56.3 prior came in at 54.3 a tad lower, hit sell made 35 pips. It did go up "shake and bake" 8 pips before the dive, but I noticed 75% of the time it usualy does that when numbers are close, but always seems to follow the numbers up or down, until market settles. This time I did it on demo, since my fear factor, but all the others were on live account. the Demo does seem to get a faster fill.

Click to expand...

I'd seriously recommend you look at trading futures rather than forex. That spread is going to kill you and if you keep making money on a live account it will only get worse. For those announcements the e mini S&P is the probably the best way to go. No spread and commission works out at 1/3 of a single tick or less. Think about it, you're paying 4 ticks per trade in spread and that's before they start messing with you.

Although I dont recommend it you can take 1 tick profit on the e mini S&P and still make money ($12.50 per contract minus $4ish commission).

I pay $4.80 commission (no monthly fee) to my broker right now. So if I take 2 tics that's a 4.04% net ROI. I said earlier I only trade announcements, but I've also started a personal campaign where I try one quick trade every day to take 2 tics each day. I only go for it when I'm about as sure as I can be that I'll get them. 4.04% X 10 days, for example, can add an extra 40.4% return. I either scalp during a definite trend, or a definite non-trend, if that makes sense. And if I lose it, I only try win it back if I see another good opportunity - no revenge trading (well, almost none).

The reason Michigan didn't have much effect is because it was the final reading, never reacts as much as the preliminary. As for ISM, the initial move was because the prices paid component was far better than expected.

This is the main thing that you need to be aware of when trading the numbers, when there is several components to the number or when there are several releases at the same time. Also, most people are looking at the bloomberg or reuters expectations and sometimes these differ. For example yesterday retuers had the ISM expectation at 56.3 compared to bloombergs 54.6. So it can get messy when the numbers are pretty much in line.

emmanuel forozis said:

Good comments everyone, about a half hour ago, I got in hearing the michigan consensus, market didnt react much so I sold and lost 7 points including 4 pt spread, I waited for the isn manufacturing 54.5 vs 56.3 prior came in at 54.3 a tad lower, hit sell made 35 pips. It did go up "shake and bake" 8 pips before the dive, but I noticed 75% of the time it usualy does that when numbers are close, but always seems to follow the numbers up or down, until market settles. This time I did it on demo, since my fear factor, but all the others were on live account. the Demo does seem to get a faster fill.

Click to expand...

A few useful (but not cast iron - what is) things to note for news trading:

1/ When market goes flat and volume drops off before a release, the news will probably generate some good movement. Entry before release in direction of daily chart as long as you are confident the news does not have the potential to be a daily trend breaker...get it wrong and stop slippage is obviously a risk.

2/ Conversely, if the market has been trending before release, news is not expected to provide much action or its already been leaked.

3/ Personally, I would rather just scalp what I see on the chart 1-2 mins after release, or wait for a trend after release.

4/ Binary options can be a good way to trade news, risk is absolutely limited. Not sure about the direction - straddle it (both directions covered).

None of the above is fact, just a few methods that can work.
I still think this is one of the best FX calendars, due to the filters and importance tags:
http://www.dailyfx.com/calendar/