Trading The News: Scheduled Data and Unexpected Events

spearchew

Member
80 0
My setup:
Broker = AMP Futures
Markets = Primarily 6E, but also 6A, 6B, 6C, ES, CL
Execution Platform = NinjaTrader Free
Data Feed = CQG
News Feed = Dow Jones FX & Fixed Income Newswire, MNI, APN + some other useless ones.
Squawk Box = Talking Forex
Funding = Enough to hit the market with 15 lots if I'm damn sure. But if I get it wrong, I'm in serious trouble.

My background:
Developed my own "Trade the News ONLY" philosophy about one month ago, although I have been an aspiring trader for substantially longer than that.

Q&A:
1) Why forex futures?
Several reasons:
* These products are sensitive to any and all global economic/political events.
* They trade through the night, and it is nice to have the *option* to place a trade when China are about to release GDP figures at 3am.
* They can move 30 prices quite easily on the back of breaking news - so there is the potential for a big winner.

2) Why AMP/NinjaTrader?
* AMP have a low barrier to entry, 500 USD to open an account last I checked, & 500 USD intraday margin per contract on the products I primarily trade. They have been rated as a relatively "safe" broker so I don't lose sleep about them going bust (read that on Zero Hedge somewhere ages ago).
* I don't bother watching orderflow, nor do I use Technical Analysis, so a very basic platform such as NinjaTrader Free is fine for my purposes - just so long as I have somewhere to hit "market buy" & "market sell".

3) Why Dow Jones / Talking Forex Squawk Box?
* I have both researched + used various news services / squawks over the last year.
My conclusions are thus: Basically the "Big Three" text-based news services are Reuters, Bloomberg, and Dow Jones. I sadly no longer have access to Reuters/BBG, and nor can I afford a terminal of my own. Dow Jones is within my price range, and although they miss a lot of the stuff I'm gunning for (e.g. Comments from Merkel etc), they are first to the punch on some items each week. Also they are excellent for rating agency actions (Moody/S&P downgrades etc).
* Talking Forex provide a cheap but decent service, and they seem to give an honest effort to report what they see on their own BBG/Reuters terminals as fast as they can. As a general rule, I will not place a trade if I firstly hear about it via Talking Forex. I consider that to be too late in most cases - the exceptions being if the news is massive / or I get lucky.

4) What do I do?
* Instead of staring at charts or price ladders, I stare at my text-based news feed for 10 hours each day. If I am quick, I can pull the trigger before the Squawk Boxes have had a chance to blurt it out on their wires, and before anyone else has had a chance to trade.

5) Do you really believe you can be first to trade the news with your non-institutional-standard-equipment?
Yes, and I record my screens + audio throughout the entire session. I have accumulated quite a lot of evidence. I provide one exhibit here.

2012 10 24 GREECE 2 YEAR EXTENSION - YouTube

6) Do you believe you can do this frequently enough to make any money, while avoiding killer losing trades?
Possibly. My basic philosophy is that the quantity of trades is not so important when the markets we trade are so deep. If I catch some major breaking news perfectly with 15 lots (and let me tell you, I was praying that I would get a Spanish Bailout Request each day for the last 4 weeks), and it runs for 50 prices, I've just made 10,000 USD. Then I sit and wait for the next big news break (Grexit?), except I hit it with 30 lots instead of 15. Does that sound far-fetched? I think it just may be possible... it is a matter of waiting for the perfect wave to come in, and hoping you aren't in the bathroom.

7) Is it possible to trade scheduled data releases, bearing in mind algorithms will always be faster than you?
* As a general rule, my answer is "No". The only exception, in my opinion, is when the number is way, way, off expectation.
* An example perhaps? US Employment at 7.8% vs 8.1% expectation.



8) How does it feel to sit and stare at a text-based news feed for 50 hours a week without making a single trade?
Yeah it is mentally very difficult. It requires extreme patience, and also a bit of luck. Luck that I am ready to click, luck that Dow Jones feed gets the breaking news first (or at least equally as fast as Reuters/BBG). One of the most upsetting things is not having access to Reuters/BBG.

9) Why write about this on T2W?
Boredom. I stare at a text-based news feed for 10 hours a day, in total silence (except for the squawk box). Wouldn't you get bored?

10) How often do these trade-able events occur?
Hard to say. I have only been doing this intensively for one month. It was a fairly quiet month in my opinion, but as a general ball-park figure I am hoping to average 1 good trade per week.
Pictures paint a thousand words, though, so take a look:

http://s7.postimage.org/u5lg76vh5/october_summary.png

http://s9.postimage.org/biarrrqx9/2012_10_01.png
http://s9.postimage.org/y5q0xx6h9/2012_10_02.png
http://s9.postimage.org/nudo59erx/2012_10_03.png
http://s9.postimage.org/x0vysjk0d/2012_10_04.png
http://s9.postimage.org/98mnh0hzh/2012_10_05.png

http://s16.postimage.org/659sri8wz/2012_10_08.png
http://s16.postimage.org/yw6mhkeqr/2012_10_09.png
http://s16.postimage.org/xv6dsfxr7/2012_10_10.png
http://s16.postimage.org/xjoxfohb7/2012_10_11.png
http://s16.postimage.org/x87h2x0v7/2012_10_12.png

http://s16.postimage.org/glpwtu7xf/2012_10_15.png
http://s16.postimage.org/5nenbnjc3/2012_10_16.png
http://s16.postimage.org/vkcx20cdf/2012_10_17.png
http://s16.postimage.org/m1388jov7/2012_10_18.png
http://s16.postimage.org/foo2yplsz/2012_10_19.png

http://s16.postimage.org/nvg2qabvn/2012_10_22.png
http://s16.postimage.org/f1p696owz/2012_10_23.png
http://s16.postimage.org/t9euxu1lv/2012_10_24.png
http://s16.postimage.org/6yqzxv4bn/2012_10_25.png
http://s16.postimage.org/6n9jl3nvn/2012_10_26.png

Handful of youtube clips just to flesh out the thread a little, my first 3 trades. Not particularly proud of myself on these, but these were taken earlier in the month when I was still figuring things out:
(Actually I didn't even have Dow Jones text-feed back then, so any profits/limited losses, was down to luck. I want to be the guy contributing towards the INITIAL spike, not the guy relying on Talking Forex to jump in when the move is already underway :confused:)





 

trader1302

Newbie
2 0
This is pretty awesome. Thank you! I'm just looking into it myself.

Today I happen to find out via google finance news, an hour before NYSE opened that Cobalt International Energy PLC (CIE) had made a substantial oil discovery. I bought in the morning and have a look what happened: CIE: Summary for Cobalt International Energy, In- Yahoo! Finance

What I wondered was, is there any obvious reasons why trading on public news consumed prior to the market actually opening is a problem? Is it necessary get the news first?
 
 
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