Anyone trade purely based on news only ?

[soccer_daemon]

Just want to get an opinion of all types of traders out there as I am in the process
of compiling some stats from my own observation plus others' experience &
contribution in forex trading.

One of the things that amazes me is the sudden volatility caused by a piece of
news release, though sometimes the so-called news has been anticpiated long
before but yet when it's released it still causes the market to break out quickly.

Anyway to cut it short, does anyone of you guys actually trade purely on the news
release (CPI, GDP, jobless claimr, PPI , interest rate etc) alone without much
attention to TA side ? And I dont mean you don't look at the chart to get a feel of
the overall market trend but just not doing any detailed TA before the trade ?

I am just compiling the stats with my own observation + paper trade purely on
news alone and focusing on EUR/USD only currently and I am seeing pure
news driven opportunity that could result in no less than 30 pips movement &
if you are watching the market & news as it happens it will not be too hard for
someone to enter a market order when the break-out happens and still make
the 30-pip movement & without all the TA.

I am in no way suggesting or encouraging this way of trading as this is purely
an academic exercise for myself to compare a TA method vs this purely
impulsive way of market speculation in terms of reward/risk & profitability.

If you have any good reference/resource/experience/opinon to share please
post it as I will compile this over a 6-month period and post result of my
observation.

In doing so myself, I plan to do it in one of the following ways:

1) Watch the market closely and trade on the market order, or
2) Straddle the market with 2 opposite trade, ie long & short at the same time
at pre-calculated break-out prices for both sides.

Any feedback or input is appreciated.

Thanks
SD

 

[TWI]

What you are suggesting is a commonly used method. Event driven funds have done very well recently and I believe this is how they go about positioning themselves. I did speak to somebody about 3 years ago and all they were doing was literally watching the Reuters screen and trading fx based on the headlines. It is not easy I would think as it is necessary to know exactly what any given news item really means in that context but if you can get away with it good luck.
As for the break-out method you mention, this is probably the most common way people trade these markets.

 

[JP1966]

Trading news is a great way to trade but you cannot do it in isolation. Look at cable this am after the 9.30 figures. On a more 'normal' day huge the current account improvement and the slightly more hawkish minutes would have caused cable to rally 50+ pips. As it was it could only move 10 pips at the most and could not break the previous support at 1.8825. This is an exceptional sign that for the time being it is very offered and long isnt the way round to be.

(it also means that if we can say break 25 later on in the day it could well catch a number of people short and we have a squeeze up)

However there is no one way to trade in my view and the key is to realise what type of market we are in. People trading purely news in January would have made excpetional money but in Febuary news had minimal impact on the market. Also in Feb the markets were very whippy and there were loads of false break outs. This is why when the 'usual' systems/strategeies aren't working it is best to cut size right down.

 

[Baruch]

It's the news that create the big moves - so it's a good idea to trade the news. But you need some good newswires - like Dow Jones.

 

[scrosbie]

Update

Just want to get an opinion of all types of traders out there as I am in the process
of compiling some stats from my own observation plus others' experience &
contribution in forex trading.

One of the things that amazes me is the sudden volatility caused by a piece of
news release, though sometimes the so-called news has been anticpiated long
before but yet when it's released it still causes the market to break out quickly.

Anyway to cut it short, does anyone of you guys actually trade purely on the news
release (CPI, GDP, jobless claimr, PPI , interest rate etc) alone without much
attention to TA side ? And I dont mean you don't look at the chart to get a feel of
the overall market trend but just not doing any detailed TA before the trade ?

I am just compiling the stats with my own observation + paper trade purely on
news alone and focusing on EUR/USD only currently and I am seeing pure
news driven opportunity that could result in no less than 30 pips movement &
if you are watching the market & news as it happens it will not be too hard for
someone to enter a market order when the break-out happens and still make
the 30-pip movement & without all the TA.

I am in no way suggesting or encouraging this way of trading as this is purely
an academic exercise for myself to compare a TA method vs this purely
impulsive way of market speculation in terms of reward/risk & profitability.

If you have any good reference/resource/experience/opinon to share please
post it as I will compile this over a 6-month period and post result of my
observation.

In doing so myself, I plan to do it in one of the following ways:

1) Watch the market closely and trade on the market order, or
2) Straddle the market with 2 opposite trade, ie long & short at the same time
at pre-calculated break-out prices for both sides.

Any feedback or input is appreciated.

Thanks
SD

Hi, I was reading through your thread today, and as 5 months have now passed since your posting was wondering if your would share a general update on how your study/method is progressing?

Would also be interested to understand which news services you have found most relevant?

Thanks

 

[Anonymous]

When the real time news is: "the interest rate setting committee has voted in favour of an increase in the interest rate", can a trader bet on a rise in the interest rate after the rate has already risen?

 

[Baruch]

When the real time news is: "the interest rate setting committee has voted in favour of an increase in the interest rate", can a trader bet on a rise in the interest rate after the rate has already risen?

It depends on the other news: labor market, inflation, house prices and so on.

Of course we can trade on the news. Soros has done that, and he didn't made it so bad, did he? :cheesy:

 

[Anonymous]

If only you can get the news before the news become news.

 

[Baruch]

If only you can get the news before the news become news.

There are the consensus before the big eco number - which you can read fx in dailyfx.com - and then there are the whisper numbers among the big traders, which dominate the trading before the news break out. Sometimes you can read about it on the wires. The whisper number about todays Nonfarm Payrolls is low, but I dont know if its true, or if any traders has inside information (it's illegal in the forex market). But I know, that if the number is high, we will get a big move, because it will be a big surprise.

There are some traders, who takes their position before the number gets out - they take a long position, if the market expect a bad number, and vice versa. Because they think that the market is always wrong. I have to admit that I don't have the stomach to use that strategy.

 

[SOCRATES]

I don't use the news at all in advance of the event. I may be curious later to see what news occured at the time the event unfolded, but I do not and never have relied on news.

I disregard the news and exclusively rely on my intuition.

When I say intuition I mean to a very large extent on my intuition.

I reason out a scenario and then wait. If I get an intuitive flash I act upon it immediately, and always protected with a tight stop.

Invariably these trades turn out to be the best and easiest.

I have learnt to listen to and to act upon my intuition unhesitatetingly.

I am reluctant to discuss this further in public as this kind of information only attracts undesireable responses.

What I can say is that disregarding or opposing intuition does not yield results.

 

[Baruch]

I don't use the news at all in advance of the event. I may be curious later to see what news occured at the time the event unfolded, but I do not and never have relied on news.

I disregard the news and exclusively rely on my intuition.

When I say intuition I mean to a very large extent on my intuition.

I reason out a scenario and then wait. If I get an intuitive flash I act upon it immediately, and always protected with a tight stop.

Invariably these trades turn out to be the best and easiest.

I have learnt to listen to and to act upon my intuition unhesitatetingly.

I am reluctant to discuss this further in public as this kind of information only attracts undesireable responses.

What I can say is that disregarding or opposing intuition does not yield results.

You call it intution. I call it "feeling for the market". You get that feeling when you follow the market day in and day out. That's why it is so hard for newbies to trade profitable. But why not follow the news? OK, you don't care about the news, but the way the market treat the news says very much about the sentiment. And it's nice to know the others traders sentiment. Or you can call it feeling or - intution.

 

[SOCRATES]

Yes, agreed. However intuition is a very personal thing and comes from within and not as a consequence of being on the lookout for what others are doing. Often intuition will indicate to you outcomes not yet developed that seem impossible and yet, with hindsight, the application of logic is proved to be wrong and the original intuitive deduction to be alarmingly right. So therefore I do not ignore it and am tuned to using it if and when it stongly appears.

 

[Anonymous]

act upon my intuition

I definitely agree with that, you have to listen to your "inner voice", the one that tells you, "Hold it Amigo, that's as far as you can go discussing strategy! Now hush!"

If you understand what that "inner voice" is. Very difficult to explain, very very difficult. It would be best to get a PhD in mathematics or statistics or physical mechanics or mechanical physics before starting a career in trading.

 

[Baruch]

Yes, agreed. However intuition is a very personal thing and comes from within and not as a consequence of being on the lookout for what others are doing. Often intuition will indicate to you outcomes not yet developed that seem impossible and yet, with hindsight, the application of logic is proved to be wrong and the original intuitive deduction to be alarmingly right. So therefore I do not ignore it and am tuned to using it if and when it stongly appears.

OK, you trust your intution, but not very much, since you use a tight stop? :cheesy:

 

[SOCRATES]

Not exactly.

 

[Anonymous]

Think along the line of the devil's advocate. Like, when you are trying to reduce weight: "Should I or should I not eat this delicious, desirable, impossible to resist, CAKE! yum! yum! yum!" Can you resist?

It is something very very very difficult to explain. Like, can you instil discipline in someone? Can you instil ethics in those who possess power, instil ethics in them so they don't abuse power?

It is that something in you, either you have it or you don't, that kind of thing. Can you resist taking something when it should not be taken? Can someone or people resist taking advantage of the less-powerful just because that someone or people is/are more-powerful, even when taking advantage of that less-powerful puts those more-powerful someone or people themselves into serious trouble?

 

[JP1966]

I would say I mainly trade news and then in second place is break outs. Of course this strategy does not always work but overall it seems to generate good returns.

Today is a classic be careful day though. For the past week or so fundamentals have seemed to have little influence. At first all figures that should have been dollar positive were ignored and so that was a sign that it was very offered. But this week figures both ways have been ignored. If the NFP is slightly stronger than expected then there is a danger, in my view, that the dollar weakens.

 

[zuke]

I don't use the news at all in advance of the event. I may be curious later to see what news occured at the time the event unfolded, but I do not and never have relied on news.

I disregard the news and exclusively rely on my intuition.

When I say intuition I mean to a very large extent on my intuition.

I reason out a scenario and then wait. If I get an intuitive flash I act upon it immediately, and always protected with a tight stop.

Invariably these trades turn out to be the best and easiest.

I have learnt to listen to and to act upon my intuition unhesitatetingly.

I am reluctant to discuss this further in public as this kind of information only attracts undesireable responses.

What I can say is that disregarding or opposing intuition does not yield results.

I stopped "listening to my intuition" and looked at what the market told me. For me, this is has lead to a larger number of profitable trades and fewer losing ones. There is n right or wrong answer. Whatever works for you.

 

[commanderco]

Very interesting thread.
I do not follow the news, in fact I go out of my way to avoid the news ... unless off course the ALL BLACKS are playing!

I just follow the chart.
If that is intuition or discipline then so be it, I have just about given up trying to explain it to people and so basically my comment here is really of very little use.

 

[Anonymous]

just about given up trying to explain it to people

If they won't listen they won't listen, no matter how you explain. You tell them it is so and so, they demand "why! why!" Even when their question shows their logic and reasoning ability is beyond belief.

Especially hard to believe are those-who-think-they-are-always-right-type, actually they are beyond reasonable hope, beyond reasonable spiritual salvation.