Forex News Trading

One of the most popular methods is to trade forex news releases. This type of strategy is intriguing to many people because of the instant gratification. You lay on the trade minutes before the release, your heart pumps when the clock ticks within 60 seconds of the number coming out, and when it does, you feel either an instant sense of elation, the trading high, or an instant sense of frustration. 

Forex news trading is great for traders who like a lot of action within a very short period of time. Trading forex news is based on the idea that when an economic number deviates significantly from the consensus forecast, there is usually a knee-jerk reaction accompanied by decent follow-through. However, there are many different ways to trade forex news releases, and if done incorrectly, it can lead to more losers than winners.

The first strategy is to place a trade before the number is released, the second is to take the trade only after the forex news release hits the wires, and the third is to do a combination of both. One of the biggest advantages of proactive trading is the risk-to-reward ratio, which is usually very good because the strategy entails entering into a position 15 to 20 minutes before the number is released. 

The reason we do not wait until 5 minutes before the release is because spreads usually widen, and some brokers will make execution difficult. Once the economic number is out, the spike that is driven by the data creates an opportunity where profits can be taken on a portion of a position or the entire position. If your view on the economic data proves to be wrong, the stop would be hit almost immediately; in other words, you are either right or out.

Before a big news is coming, we can buy and sell some currencies pairs at the same time, same lots, set stop loss prices for them. After the forex news is released, especially, for the big one, both sides of the buy order and sell order will jump significantly. No matter which order is a winner, just let it go. And the loser will hit the stop loss, just let it be.

The winner's gain minus the loser's loss, it is your forex news trading profit. For example, Non Farm Payrolls/ Employment Report- The NFP is the most influential forex news release of every month. It's released on the first Friday of the month at 8:30 AM EST. Don't forget, set 30 pips stop loss level for them. Wait 2 minutes only, the forex news is announced, it is a big one!

Then the sell order jumps over 100 pips and the buy order drops like a brick. The brick hits the stop loss and the pain is over. Your total gain could be 100-30=70 pips. Quick and easy, cool enough!