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Posts Tagged ‘news trading’

My Take on Trading the News

News trading has become quite popular in Forex in the last few years.

Mostly because it offers an opportunity for traders to make a quick gain (based on the volatility generated by traders and investors trying to get a piece of the movement).

But the questions is, could it be possible to get positive and consistent results trading the news? I don’t think so, and here are the reasons.

There are two common strategies used to trade the news:

  1. Straddle Technique and
  2. Trading based on the deviation between the expected and the actual figure.

1. Straddle Technique

This technique consists on placing two entry orders before the fundamental release, an order to go long above current market activity and another one to go short below current market activity.

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Did you trade the non-farm payrolls report?

I didn’t, most of you already know I don’t like to trade news announcements. You never know what could happen, almost an infinite scenarios are possible:

We could get a good number and:

  • the market could go down
  • the market could go up
  • the market could stall
  • the market could spike up or down

We could get a bad number and:

You never know…

So I’m just curious to see if there are still traders that trade news announcements.

Do you trade them?

Have a great weekend!

Raul Lopez
Forex Training