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Forex trading in press release -by Ecork

Reviewed by Nick Cawley on December 10, 2021.

trade forex newsletters pIt requires a tremendous amount of calm, preparation, and a well-defined strategy. Without these qualities, traders can easily immerse themselves in all the excitement of the fast-moving market on their account. This article provides helpful strategies on how to trade forex news during a major news release.

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Forex news trading strategies

These are two Popular Forex Trading Strategies In The Press Release:

  1. Spike Fade’s Initial Strategy
  2. Straddle News Strategy

Each one provides a solid plan for traders to follow, depending on the market environment observed at the time of release, and how best to approach that particular market.

Before reading further, it is essential that you have a good understanding of the basics of news trading. If you are new to the world of trading or simply need to refresh your knowledge, take a look at Introduction to how to trade forex news.

1. Initial Spike Fade Strategy

This strategy aims to take advantage of an over-reaction in the market in the short term by fading out the initial move. This strategy suits reversal traders, speculators, and day traders due to the rapid movement and erratic pricing that often follows a major news release.

Excessive reactions and subsequent reflexes appear fairly regularly in Forex market Where large organizations add to the increased volatility of the initial movement. The the market as a whole, frequently escalates as an overreaction and thus pushed the price back towards pre-release levels.

Once the market calms down and margins Returning to normal, the reversal often gains momentum showing early signs of a possible new existence direction.

The disadvantage associated with this strategy is that the initial rally may turn into the start of an extended movement in the direction of the initial rally. This emphasizes the importance of using well-defined stops to reduce downside risk and get you out of a bad trade quickly.

how to implement iInitial Rise Fade Strategy:

  1. Select the relevant currency pair: Make sure that the main news event corresponds to the currency pair required for trading, i.e. non-farm jobs will affect American dollar crosses.
  2. Switch to a five minute chart: After selecting the desired market, switch to the 5-minute chart just before the news release.
  3. Notice the close of the first five-minute candle: Usually the first five minute candle is very large. When the price is approaching a sharp rise or a sharp decline, fade the movement by trading in the opposite direction.
  4. Stops and Restrictions: Stops can be placed 15 pips above the high for a short position or 15 pips below the bottom on a long position. Targets can be set at two or three times the stopping distance.

The Initial Surprise Fade Strategy in Forex News Trading

2. Straddle news strategy

The news spread strategy is ideal for traders who are anticipating a huge spike in volatility but are unsure of the direction. This strategy derives its name from a nesting strategy typical of the options trading world because it uses the same basic strategy – to take advantage of increased volatility when the trend is uncertain.

Disadvantages of getting news on a large scale when Price breaks support or resistance only to reverse shortly thereafter. Likewise, the price can trigger an entry order and move towards your target only to reverse until it hits your stop.

This strategy can be implemented using the following steps:

  1. Create a range with support and resistance.
  2. Set two commands to open: set work order / Entry order to open a Long Trade if the price breaks above the resistance level and one to go short If the price is trading below support.
  3. Removing the remaining command after confirming the direction: The market has the ability to break out of the range and once that happens, one entry order will be triggered, and a trade will be opened. Immediately remove the unrun entry command.
  4. Pauses and restrictionsA tight stop-loss order can be placed at the lowest level of the last range when buying and the most recent price when selling. Limits can be set in line with the positive Risk to Reward Ratio.

Straddle . News Trading Strategy

Circulation of news during release: Conclusion

Forex news trading in press release It has the ability to confuse traders with increased volatility in a short period of time. However, by adopting a solid strategy, traders can handle these volatile periods with greater confidence and mitigate the risk of a wild market by using guaranteed stops (when available).

Take a look at What our internal analysts predicted as Best Business Opportunities for the year.

Trading forex news releases FAQ

How can I know which direction the market will trade after the release?

Predicting the economic release is one thing, and predicting how traders will react to the news release is very difficult. When the estimates are not surprising or somewhat similar to the previous recorded number, the market tends to absorb this information and this is reflected in the period leading up to the release. However, there is no guarantee that the direction/trend of the market will be maintained even if the news comes out exactly as estimated. This is because different market participants can draw different conclusions that will affect their trading.

One person might consider data that prints in line with expectations a bad thing and another might view it as a good thing. The bottom line is that traders need a strategy in place with predetermined risk criteria.

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