Positioning Yourself Prior To Economic News Release – Forex Trading Strategy Q&A
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The first way I trade a high impact news event is by positioning myself before said you news event, so before the news is released I will place my trade beforehand so that I can catch the spike. A classic example of this is when a central bank is going to hike interest rates, in that scenario when it is almost certain that the central banks are going to do as anticipated there will always be an immediate effect to the markets and the currency will spike in the value of the currency price.
When you are applying this method you need to be certain of what it is you are looking for and have done your fundamental research, in essence make sure you are certain and have conviction before placing a trade prior to the event.
The second way I trade news events is from the aftermath, so let’s say you’ve got a high impact news event coming out and you’re not quite sure which way the data will go whether it will be positive or negative and then it comes out positive and the currency rallies. What you can do, or what I do is observe the rally wait for a pull back or for the pair to hit resistance or go into a Fibonacci zone and then I’ll look to trade it as it corrects moving forward as it is very rare that the market moves in straight lines and there will most definitely be a retracement and vice versa you can do the same if the data comes out negative the currency drops and I know that it’s due a retracement I will get into the market when the currency hits a level of support and the market starts buying it back.
As I mentioned this is all very dependent on the research that I have done and how confident I am that said currency is going to retrace or alternatively if I am trading prior to the event how confident I am that the release is going to come out as I expect it. If I’m not so confident I’ll trade the aftermath if I am very confident I’ll trade prior to the event, so there we go two scenarios how I position myself around news events I hope that’s helped and maybe you guys can apply that in your own trading and make some pips.