Don’t you love it when you have a trade on and it goes 100 pips in your favour very quickly, you pull out of the trade and feel smug. Some traders actually trade news. These super-scalpers wait for just the right moment. So I thought I’d include some hints that I’ve learned (the hard way).
1. Look for the outcome in advance
The news you are trading, what is the expected outcome, google it, and find out what the implications would be if that out come were to happen.
2. Be prepared.
There are only 3 outcomes from news.
a. A Strong Bullish Move
b. A Strong Bearish Move
c. Virtually no move at all
3. Use SHORT STOPS – HIGH RISK, LOW INVESTMENT
Don’t go into a trade with huge stop loss, use a short stop so if it goes against you you lose minimal money. Don’t take the trade off until it stops. This might seem odd but the amount of times there has been a small bounce and then it’s gone in the favourable direction.
4. Trend Trading
Look for a channel, there will be one on a chart somewhere, when you find it, aim to trade at the top (for a bearish trade) or the bottom (for a bullish trade). If you trade WITH the trend, then if nothing happens you can still get a sweet profit (just not a big one!). More about trading the trend (clicky).
5. Don’t trade till AFTER the time for the news. There are two reasons.
a. If you trade before the news the trade may move against you more, although you don’t stop out, you don’t make as much as you would if you had gone in at the very last moment.
b. If nothing happens immediately then you can wait till the opportune moment or decide not to trade!
6. Decide if you are buying or selling (or both) before the trade, plan the trade based on evidence not just a good luck toss of the coin. All trades should have a reason or 5 the more reasons the more valid the trade is, you will win far more trades if you go WITH the trend, with the reasons, with the expectations of the markets.
My advice. Don’t trade like this unless you are very experienced. Remember the markets are controlled by TRADERS who understand NEWS.
NEWS >>>> TRADERS >>>> MARKETS
Sometimes a bearish move can last just a moment and then reverse fast, so if you are new you are better trading the trend.