How I handle fundamental announcements (and CADCHF trade update)
Last Thursday I wrote about a long signal in the CADCHF, at that time, it was trading in a very clear bullish condition.
When I looked at the short term charts it was trading in a clear range: which means clear S&R levels and clear swings.
So I thought it was a good idea to trade a breakout of the short term range… usually setups like this one work pretty well…
When my trade got triggered, everything was fine… it traded for a while in a very tight range pretty close to my entry level.
Then something happened…
The CAD GDP announcement was released.
And everything changed, the CADCHF fell like a rock.
How I deal with fundamental announcements
So I thought you would appreciate if I shared with you exactly the way I handle fundamental releases.
You might think that I have 20 rules for them… but no, if you have been following me for a while you know I like to keep things simple.
When things are simple, I feel condiment and comfortable, and when things start to get complicated I just re think things and start all over again.
So here is my only rule:
If I don’t have at least 70/80 pips on my favor and there is an important announcement I close my trade.
That’s it! You don’t need more than that…
Sometimes you need to hold your trade even during important announcements, otherwise it would be almost impossible for your trade to hot your take profit orders.
But hold it when the market has already showed you that it is likely to continue to move on your favor and you have enough room to let the market breath during that announcement.
So when the GDP was released the CADCHF was trading near my entry level, so I had to close my trade.
Here is the list of the fundamental announcements that I consider important:
- Unemployment reports
- GDP announcements
- Central bank authorities speeches/minutes
- Interest rate decision
- Trade balance
- Sentiment indexes
These are the fundamental announcements that I consider the most important ones, but sometimes other releases become important.
To give you an example, remember the housing market crisis in the US? Well, at that time, every housing related indicator became relevant and very important so their impact in the market because of those releases was pretty high.
Or for instance, a particular country has inflation trouble, then CPI and PPI become relevant and for on and so forth.
Other things that you need to know about fundamental releases
CAD and GBP are the currencies that react the most to their fundamental releases.
AUD and NZD are the currencies that reach the least to their fundamental announcements.
Every fundamental release have the potential to change the sentiment of the market (even the non important ones). If its “different enough” from what traders and investors are expecting, it might change the sentiment of the market.
Dont expect the market to behave rationally to their important announcements. Sometimes a good figure will make the market fall, and some others a good figure will make the market go up. Dont break your head trying to figure out the answer, there is no answer.
What do you think about the way I handle fundamental releases?
Is there anything else you would add to my strategy?
How do you handle them?
What currency pairs are you currently monitoring?