theneedforspeed
Newbie
- Messages
- 1
- Likes
- 0
Any ideas or strategies of how to trade the news ?
News trading - ideas how to trade news as markets move too fast at news tine to get ?
- Thread starter theneedforspeed
- Start date
- Watchers 3
Rhody Trader
Senior member
- Messages
- 2,620
- Likes
- 266
If you really want to trade the news you need to learn how to read how much the market has already priced things in. You probably won't do well using simple good/bad news trades. The algos will be way ahead of you.
You can certainly try to trade the news intraday but if events/volatility/reaction tick up just a little bit you just might as well toss a coin.
But longer term, most programmed economic events like NFPRs, central bank rate decisions, band chair speeches, bank rate committee minutes releases etc. tend to confirm and continue pre-existing trends, accelerating them temporarily, they rarely reverse well established trends.
But longer term, most programmed economic events like NFPRs, central bank rate decisions, band chair speeches, bank rate committee minutes releases etc. tend to confirm and continue pre-existing trends, accelerating them temporarily, they rarely reverse well established trends.
You don't need to know how much the market is priced in to make money from news. There are generally 2 scenarios that pan out with news trading. The first is trading better or worse than expected results. The other would be positioning yourself for an anticipated outcome. I trade only currencies and it's a game of economies, cyclical trends and expectations. Find the strongest and trade those against changing economies or expected weak ones.
Rhody Trader
Senior member
- Messages
- 2,620
- Likes
- 266
The first one is WAY more effective if you know how the folks doing the second one have already set the market up.
Better/worse than expected is only really meaningful in the context of how the market is positioned. The survey expectations are just an average. The market position is what people are actually willing to put money one.
new_trader
Legendary member
- Messages
- 6,770
- Likes
- 1,655
Ignore the news
Ignore the 'news'. Everything is supply and demand. Study price action
Ignore the 'news'. Everything is supply and demand. Study price action
Yesterday's Nfp was a good example of better than expected. It was even better than the higher estimate in surveys.
Rhody Trader
Senior member
- Messages
- 2,620
- Likes
- 266
As I said, it only matters if it's better/worse than the market expects and has positioned for. What economists expect (survey) only provide a potential guide. This is why the markets sometimes don't move at all - or move in the opposite direction - when good/bad data comes out.
Think of it this way. If everyone who is likely to care about a given number has already gone long ahead it, who's left to buy if it comes out positive (aside from the algos, who won't be in for long)? And what's likely to happen if the number is negative? Probably a bigger negative reaction than you'd see if the market was more balanced.
dbphoenix
Guest Author
- Messages
- 6,954
- Likes
- 1,266
It also helps to remember that market participants occupy several classes. One example has to do with timeframes. When those who are trading longer timeframes (usually bigger money) and those who are trading medium timeframes and those who are trading shorter timeframes are all trading in the same direction, price movements can be impressive. But when they are trading at cross-purposes, movement can be chaotic, if price moves at all.
Members of these various classes, as well as daytraders and scalpers, will all approach news differently. One can see this most clearly with regard to events that might influence interest rate determinations, such as the NFP. It is not uncommon for a good NFP report to result in a move downward because of the concern about a raise in interest rates. If price instead rises, those who bought before the report will begin to sell into the rally. Those who were short will begin to cover their shorts, extending the rise. Then the latecomers will begin to chase all this even though much of the buying is done. These latecomers can also fuel a further rise, but, given that they are latecomers, they are the most likely to be left holding the bag when the buying exhausts itself.
Therefore, while watching price movement is a plus, knowing who's moving it and why enhances understanding and reduces the element of surprise.
Members of these various classes, as well as daytraders and scalpers, will all approach news differently. One can see this most clearly with regard to events that might influence interest rate determinations, such as the NFP. It is not uncommon for a good NFP report to result in a move downward because of the concern about a raise in interest rates. If price instead rises, those who bought before the report will begin to sell into the rally. Those who were short will begin to cover their shorts, extending the rise. Then the latecomers will begin to chase all this even though much of the buying is done. These latecomers can also fuel a further rise, but, given that they are latecomers, they are the most likely to be left holding the bag when the buying exhausts itself.
Therefore, while watching price movement is a plus, knowing who's moving it and why enhances understanding and reduces the element of surprise.
WklyOptions
Well-known member
- Messages
- 269
- Likes
- 24
trading off news results
Hi, theneedforspeed,
Trading off important scheduled News reports can be a fun and profitable game for short-term day scalpers. But - as others have posted above - there is some basic "research" you will want to have in your arsenal:
1. Study past Price Action of the same News in previous months, quarters. Have a good idea of the Expected Range of pips achieved - can use Avg True Range, Keltner or Bollinger Bands, etc.
2. Trade only on scheduled News that are of the "red folder" types - high priority and highly traded news.
For scalping - we want increased volatility and increased order flow/liquidity. In fact we have found that HFTs actually can help us scalp to our Target profits.
3. Look for specific Price Action on M1 and M5 - look for trigger bars like wide range bars (or other types).
4. Plan to exit if Profit of N pips hit based on (1) above. But - be ready to Stop and Reverse on a pre-planned width # of pips based on volatility data.
In summary - our traders of News Events are really breakout traders that establish "straddles" in the FX markets. And be ready for at least 2-3 re-entries!
FYI - past Fri with the NFP report - easily made (+40 pips). Avg of NFP volatility has been past (+60 pips) trading and measured using GBP asset pairs.
This week has four key News events worth tracking and demo practicing:
Tues 0430am NY - England's Manufacting/Production data ----> aim for (20 to 40 Pips) per std lot. Consider GbpUsd, GbpJpy, GbpNzd, GbpAud.
Wed 1700pm NY - Royal Bank of New Zealand Banking Report --> also (20 to 40 Pips) per std lot. Consider NzdUsd, GbpNzd.
Thurs 0830am NY - US Unemployment Claims Report --> target (20-40 pips) per std lot. Consider UsdJpy, GbpUsd, EurUsd.
Fri 0830am NY - US Retail Sales & PPI data --> target (20-40 Pips) per std lot. Consider GbpUsd, UsdJpy.
Hope this helps generate some ideas for you and other News traders! The benefits of being a News Trader include:
a. Scheduled events - you don't have to stalk charts, etc. Only before News releases.
b. "Red Folder" events are almost guaranteed to have higher volatility and order flow as the HFTs and algos kick in most frequently on these events.
c. It's exciting - usually at least 1-2 strong News events per week!
The above ideas and pointers are definitely well-established and "not new" ideas in that sense - but very consistent and once your procedures are established and rehearsed repeatedly - there is low chance for random errors/careless errors.
Good luck - practice practice practice on Demo mode first!
WklyOptions
Hi, theneedforspeed,
Trading off important scheduled News reports can be a fun and profitable game for short-term day scalpers. But - as others have posted above - there is some basic "research" you will want to have in your arsenal:
1. Study past Price Action of the same News in previous months, quarters. Have a good idea of the Expected Range of pips achieved - can use Avg True Range, Keltner or Bollinger Bands, etc.
2. Trade only on scheduled News that are of the "red folder" types - high priority and highly traded news.
For scalping - we want increased volatility and increased order flow/liquidity. In fact we have found that HFTs actually can help us scalp to our Target profits.
3. Look for specific Price Action on M1 and M5 - look for trigger bars like wide range bars (or other types).
4. Plan to exit if Profit of N pips hit based on (1) above. But - be ready to Stop and Reverse on a pre-planned width # of pips based on volatility data.
In summary - our traders of News Events are really breakout traders that establish "straddles" in the FX markets. And be ready for at least 2-3 re-entries!
FYI - past Fri with the NFP report - easily made (+40 pips). Avg of NFP volatility has been past (+60 pips) trading and measured using GBP asset pairs.
This week has four key News events worth tracking and demo practicing:
Tues 0430am NY - England's Manufacting/Production data ----> aim for (20 to 40 Pips) per std lot. Consider GbpUsd, GbpJpy, GbpNzd, GbpAud.
Wed 1700pm NY - Royal Bank of New Zealand Banking Report --> also (20 to 40 Pips) per std lot. Consider NzdUsd, GbpNzd.
Thurs 0830am NY - US Unemployment Claims Report --> target (20-40 pips) per std lot. Consider UsdJpy, GbpUsd, EurUsd.
Fri 0830am NY - US Retail Sales & PPI data --> target (20-40 Pips) per std lot. Consider GbpUsd, UsdJpy.
Hope this helps generate some ideas for you and other News traders! The benefits of being a News Trader include:
a. Scheduled events - you don't have to stalk charts, etc. Only before News releases.
b. "Red Folder" events are almost guaranteed to have higher volatility and order flow as the HFTs and algos kick in most frequently on these events.
c. It's exciting - usually at least 1-2 strong News events per week!
The above ideas and pointers are definitely well-established and "not new" ideas in that sense - but very consistent and once your procedures are established and rehearsed repeatedly - there is low chance for random errors/careless errors.
Good luck - practice practice practice on Demo mode first!
WklyOptions
