I trade forex predominantly from chart patterns as I have shown you in this course. However since the start of the financial crisis I have had to pay a lot more attention to the news. I read the financial broad sheets and check out up to the minute announcements on Forex Factory ‘s website. Speech by a major politician can also cause rapid moves, so best practise is check the calendar before placing trades.
On the subject of stops, please note that they are NOT guaranteed and years ago I was unfortunate enough to be in a trade at NFP where price jumped over my stop and cost me an extra 80 pips which meant that whereas I had risked 3% on the trade I ended up losing over 20% of my account!
How to Trade Around The News
I do NOT trade the news per se. I wait for news to be released and wait for the dust to settle, THEN take a trade or not depending upon the result and more importantly the outcome.
Often there is an over reaction at a piece of news. Price races off in one direction only to stall and then race the other way. Forex often appears to be silly & illogical, none more so than the NFP news (Non Farm Payrolls- USA jobs news) which I never trade. On too many occasions I have seen price shoot up 100’s of pips only to fall back down and move 100’s in the opposite direction.
Sometimes news comes out that appears to be positive for a currency and yet price races in the opposite direction. I show an example in the video where positive Canadian news saw the value of the Canadian currency fall. So traders who dived in to a trade at the release anticipating a win, found that they had lost and are probably still scratching their heads. My best advice is follow my lead and wait:
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Trade Around Forex News