Today we are going to talk about a major issue, which is trading during news releases. Such news is usually a public speech of a chairman or data release of an important organization, that has a minor or great impact on the markets.
Today we are going to talk about a major issue, which is trading during news releases. Such news is usually a public speech of a chairman or data release of an important organization, that has a minor or great impact on the markets.
The dates of major news releases might become really bad days in your trading experience. Later in the article, I am going to show you a vivid example of such a bad day on a particular chart from November 29th, 2018, in the Asian session.
There are only two types of such releases and today we’ll talk about both of them:
- Scheduled release
- Unscheduled release
How to Control Your Trades During Unscheduled News
Let’s talk about unscheduled news that will come out during your trading session when you least expect it. These occurrences can really have an impact on our trades. This might happen even when you have a trade going and you went to sleep. When you’re back to your charts the next morning, you will find you are negative big time.
As traders, we have no control over this, however, there is a way we can protect our trades from major losses. Remember to always enter a trade with a set Stop Loss. You are still going to take a loss, but it is a controlled loss that makes a big difference.
Scheduled News Release
Let’s see how a scheduled news release might influence our trades on a particular example. This is a chart of the EURUSD from November 29th, 2018.
5fi
You can see that we had a bearish trend on the 1-hour chart. The price was moving nicely to the downside with the trend. I have to say we have been bearish in this pair for over a year now, so I’ve set a downside bias for the pair.
The Fed Chairman Powell was to speak at 1 p.m. Wall Street time. It was a scheduled release we’ve been talking about. This was on all financial and trading calendars and was no secret to anyone. Fed Chairman Powell was Dovish or negative in his speech and the markets really did not like that. That is why you see big green candles moving to the upside.
So what can we do in such a situation? As a trader, if you are in a trade already, especially a US dollar trade, make sure to set your protective Stop Loss in place. Otherwise, don’t even think of riding this storm out. Having your Stop Level set in such a situation is always good news.
Just a side note on this event: it affected most currency pairs we trade. So no matter which pairs a news release is going to impact, make sure to always protect your trades.
These Are the Main Things to Remember
- If you are in profit, place a Stop Loss and relax
- If you are in a trade and you wish to stay, have a Stop Loss in place
- If you are in a trade and don’t want to take the risks, just exit it prior to data release
Of course, this is only my opinion on this matter. Unfortunately, if the news is unscheduled, you can’t really do anything. Just set yourself a firm rule to set a Stop Loss for every trade you enter.
I prefer not to be in trades, taking place during scheduled news releases. I am an intraday trader, so I do not keep a trade overnight 99% of the time. I just prefer not to stand in front of a train coming down the track. The chances of being hit are way too high. (ADVT)
Author: William K. Gilday at www.fxclearing.com
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