Strategy Forex Trading News | Trading System
Strategy Forex Trading News (also known simply as Straddle ) was specifically developed for trading in Forex before important news with the least possible risk. It can only be used for publications influential Forex news as GDP, non farm payrolls, or the interest rate decisions of the United States. Although all currency pairs react to such news, currency pairs based on the USD show the best results due to low spreads and high liquidity.
Characteristics of this Trading News
- Avoid expanding spreads and problems of slippage.
- foundation for a position.
- simple configuration.
- High success rate.
- Important news events are very rare.
- A broker is required with low spreads and execution of high quality operations.
How to Trade?
- Choose a press release important to have a high impact on currency pairs.
- For EUR / USD, I recommend the GDP , the non – farm payrolls and rate decisions of US interest; decisions of interest rates in the euro zone and the US PCE reports
- Open positions buying and selling one minute before the publication of the news. This will help protect your position slippage and widening spreads.
- Set the stop loss (SL) for both positions 10 to 20 standard pips depending on the expected volatility of the news.
- Set the take-profit (TP, or take profit) for both positions in 5 x SL . That will provide the necessary risk-reward ratio.
- The volatility of the news most likely trigger stop-loss position and a take-profit of the other.
- Move stop loss position to continue actively to break even once the gain reaches the original distance of the stop-loss.
- Closing all outstanding positions one hour after the news.
If your broker uses a FIFO execution model, it is still possible to operate with the news with this strategy. Place pending orders with entry points at the level where would set the stop-loss of the original positions Buy / Sell. When a pending order is activated, the other must be canceled. This change of strategy is required for use in Meta Trader 5. Unfortunately, it suffers from an additional extension of exposure spreads and slippage.
Example of Strategy Forex Trading News
The example represents a transaction with USD / CAD chart 30 minutes during a joint announcement of unemployment figures US and Canada for October at 13:30 UTC on November 6, 2015:
- Entries are displayed with blue and red arrows pointing right.
- The blue is Buy; the red is Sell.
- The stop-loss levels are the lines original red above and below the entries.
- Line pink is the stop-loss operation Buy after moving to break even.
- The levels take profit (TP) lines are green above and below the entries.
- The sale was closed by stop-loss in the first second after publication. The output is marked with arrow red pointing left.
- The purchase was closed to pass the time limit of one hour after the news. It failed to reach the target level, but offered enough profit to cover losses from the position of sales and produce a significant reward. The output is marked by arrow blue pointing to the left.