Hello Forum members! In this thread I am about to explain how I use fundamentals trading on the right way and how we can take benefits of news releases every week. Probably all know, about Forex calendar and news. That’s way, I am not want to explain that in details. My main target is here is to let people know how to trade in news time, what to look for and when exactly trade on.
To be honest, I am not the most successful news trader definitely. I have some mistakes on regular basis but I am learning this and sometimes I can actually get some lovely pips from news trading.
First rule for news trading I have noticed and come up with: Do not speculate on pre-news because; trust me there are so many investors who do that so, in case you are wrong on speculation. It is definitely hard to get out of that trade, in case there is surprise in that release to opposite decision.
2nd Rule: You should always look for release, do not trade it, if you do not get any surprise at all. As, if Manufacturing PMI for pound was expected at 47.8 and it came exactly at 47.8 then wait observing market reaction, but likely there will be not at all mostly. So, you might not want to be in that trade too. But, if you trade one release like I mentioned the same manufacturing PMI, you should definitely pay extra attention to previous releases over at least 1-2 weeks period for pound. Because, if there is down trend, bad release, then market is likely to penalize pound if there is even slight miss in that release. I am acquainted with many Forex traders might ask what to do if there are like 9-10 releases for EUR. How to know when we should trade? And when not.
So, first of all of course look at which is the more important among of them. Obviously, French unemployment data will be less important than whole Euro zone data. That’s way, do not wait for much of an action after 1st release. Wait for final numbers. Wait for the most important releases to come out. I have came up with losing trades only because, I jumped in trade after maker moved about 25-30 pips after release. But, later we got more important release at much better numbers and obviously market gave up that dip and went even future up. I ended up with losing trade.
I have a great way, how to trade news release that is, open M5 time frame on that pair you are looking to trade. Do not use more than 30 pips SL. If you do not get any surprise in release then do not open your trade that I said before. You should set your TP for 7-80 pips (maximum 100 pips).
One big aspect we have in Forex is all the meeting minutes, rate decisions, press conference. This is which is most complicated part in Forex. Sometime market can be very aggressive and volatile and extremely unpredictable too.