How I handle fundamental announcements (and CADCHF trade update)

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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.

Your turn

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?

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Raul Lopez

I've been trading the markets for more than 15 years. I believe the best way to trade is by adapting to the market conditions. You can learn it too, join our community .

  • royco

    CADCHF- in the original analysis, why did you logic it would retrace back to .8359??

    • Raul Lopez

      Hello Roy, what retracement are you talking about? Are you commenting in the right article???

  • Chad Hogan

    Hi Raul,

    My eurnzd trade hit tp, I also added to that trade so it was another successful trade. I closed my gbpnzd trade prior to the CPI index at around 40 pips. Turned out it would of been ok so Im a bit disappointed there. Do you consider the CPI index as major news for GBP? Just wondering for future reference.. What pairs are you trading?

    • Raul Lopez

      That was perfect timing in the EURNZD Chad hehehe, congrats!!!

      CPI could be considered an important announcement in the GBP (and CAD) related currency pairs… and with only 40 pips in your favor, I think it was the right decision to bank them…

      You’ll get more opportunities to long it (perhaps now?)

      Good luck!

  • Chad Hogan

    Raul,
    My eurnzd missed my tp by 9 pips. Im confident it will get there. Ive just shortened my stop should it retrace too much. My tp for gbpnzd is 2.01508. entry @ 1.98187 on a pullback to sf box. There is gbp news tonight so I’ll probably have to close that trade if it doesn’t get out in front enough. Audjpy was another pair that fitted my plan but for me two active trades are enough for me right now.
    I’ll keep you posted..

    • Raul Lopez

      Wow 9 pips!!!! It has been hit by now though hasnt it? Good TP in your GBPNZD trade, it should hit that level…

      And about AUDJPY… isnt that clear anyway so dont worry about it hehe

      Good luck Chad!

  • Chad Hogan

    News is certainly a pain in the $#@!
    I try and implement the same method for news announcements. The difficulty is when we’re asleep and there’s news. Sometimes it’s hard to make a decision to close out on a trade when your in front!
    Im still long on eurnzd. Almost at tp. Im also long on Gbpnzd, pending news tonight And Im watching gold closely. .

    • Raul Lopez

      Hey Chad, EURNZD has been a patience exercise hasnt it?

      GBPNZD, we’ve got plenty of room, where do you have your TP at?

      And XAUUSD is a very easy short…

      They way to go Chad! Congrats!

  • Eric Aroh

    Raul,

    Thanks for sharing the way you handled a potentially explosive trade (in the negative direction), and mitigating the consequent loss due to the fundamental announcement.

    I take this as one of the most important trading strategies/plan that must be imbibed by all of us – practical risk management.

    I actually never got into the trade – my trigger point was not triggered.

    Thanks for the rule of thumb – 70/80 pips (advantage) before major fundamental announcements, and close if not in our favor.
    Thanks.

    • Raul Lopez

      I’m glad it was useful!

      Let me know if you have any question!

      Good luck!