Trading Around The News

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TRADING AROUND THE NEWS

• Reference
• https//www.platinumtradingacademy.com/

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Index

• Trading Around The News
• Why I Try To Avoid Trading Around Major News
  Releases
• Strategies For Trading Around Major News Releases

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(No Transcript)
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Trading Around The News

• I am a fundamental trader first.then a technical
  trader second.
• Personally, I do not place trades based on news
  announcements any more.
• I have had many bad experiences around news
  announcements so I have learned to stay away.

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• I am referring to Forex Factory - RED news
  events only, the minor news really doesn't
  concern me that much, as these events do not
  really move the markets.
• I will give you a few reasons why I avoid trading
  during major news events, but I will also give
  you some strategies for trading around news
  announcements.

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• Firstly, let me just say that I believe that news
  announcements are almost totally unpredictable.
• As you know from various websites such as Forex
  Factory there is usually a forecast and a
  previous number listed prior to the news
  announcement being made.
• The markets reaction is generally based on
  whether the actual announcement is higher or
  lower than the forecast.

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• The issue to bear in mind here is that this
  assumes that all traders (or at best most
  traders) react the same way to the relation
  between the actual number, the forecast and the
  previous number.
• Even if we could correctly interpret this
  information, it is difficult to enter trades
  during these times because trade execution /
  slippage suffers within a fast moving market.

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Why I Try To Avoid Trading Around Major News
Releases

• 1 In my opinion, for what it is worth, these
  news releases have very few long-term
  implications and are unpredictable in the short
  term.
• Of course, there will always be traders that may
  use these numbers at news events to various
  degrees of success, but I have never seen or
  heard of traders with strong evidence that you
  can profit while trading news release numbers
  over the longer term.

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• In any event, the one constant around trading
  major news events (such as Non-Farm payrolls) is
  that there are rapid moves way above the normal
  magnitude.
• These moves can also be very erratic.
• Sometimes the move is in one direction.

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• Sometimes the move looks like it will be in one
  direction, and then it moves back to the starting
  point just as fast.
• Knee jerk reactions are commonplace on high beta
  news events.

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• 2 Furthermore, news related moves can be very
  irrational.
• Not only do they often ignore the logic of the
  news announcement itself, but also these moves
  often ignore the logic of the technical analysis
  that we rely on.
• It would be much easier to trade these
  announcements if traders were rationalbut they
  arent.

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• Therefore to me the most useful aspect of these
  major news announcements is the time that they
  take place.
• I then use the timing of these announcements to
  avoid placing trades right before then.

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Strategies For Trading Around Major News Releases

• 1 Never place a new trade ahead of major news.
• 2 If you are already in a trade you need to
  decide if the trade is in a small loss or small
  profit position whether or not you just close the
  position.

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• You have to remember around major news events
  that if you have a stop in position that may only
  25 pips away from the current price, and if there
  is huge volatility you may not get your stop
  filled at the price you have at your broker.
• It could be filled 40 or maybe 60, 70 or 80 pips
  away from your price if there is a major move,
  and your stop order may be filled many pips away
  from your loss that meets with your TRADING Plan
  objectives.
• You have to ask yourself why risk a 70 pip or
  whatever loss?

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• 3 If you are in a longer-term position you just
  have to ensure that your stop loss is sufficient
  to cope with volatility and that it still meets
  with your TRADING PLAN rules.
• 4 You may want to limit risk by reducing a
  trade size ahead of the news.
• If the news event goes in your favour you can
  always add back to a trade.

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• 5 Be prepared for the knee-jerk reaction to the
  news event. U.S. Non-Farm is notorious for this.
• The initial move may not always be the market
  move and directional trend.
• At Non Farm, I wait at least 10 minutes before
  trading the news event.

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• Other traders will tell you to wait 20 minutes.
• Sometimes the best Non-Farm approach is NOT to
  trade!
• 6 The best advice and trading strategy around
  news events.DO NOT TRADE them.

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Thank You