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Significant news events happen throughout the month and the biggest is Non-Farm payroll. Its impact on price action is usually dramatic, and there is little to tell which way it is going to go. The usual rule of thumb is to stay out of the market on big news event days, or at the very least manage running trades with caution. The other approach, by those using larger time frame strategies, is to embrace it! This is not really possible on the smaller intra-day time frames where the smaller bars are more susceptible to the idiosyncratic movements of news events and can typically be spiked in and out of the trade before frustratingly seeing it head in the hoped for direction.

However for larger time frames, such as the daily bars, the opportunity to play the odds can be very rewarding. It’s all about reward to risk ratio. Big news events can, and often do, cause big swings with a single movement going several percent in one direction. If this goes in you favour of course it’s very rewarding, but predicting the direction is the difficult part. So the approach is not to try and predict the news, and therefore the resulting direction price will take. It’s simply not worth the effort. Just think about the reward to risk. It’s literally a toss of a coin as to which direction price will go but if you’re targeting a reward to risk of say between 3 and 6:1 then with a 50/50 win probability the rewards are going to heavily outweigh the losses.

News trading must only be done where there is high reward potential with minimal risk, otherwise it’s a recipe for disaster. It can only be done on an end of day strategy where the larger daily bar has more chance of ‘soaking’ up the turbulence without getting spiked in and out before the big move. Don’t try and second guess the news or resulting direction, just focus on the technical, trading what you see with (and it can’t be overstated) maximum reward potential and minimum loss potential. Read More.

Do you want to learn more?

VIDEO: Trading the NFP - LittleFish FX
REPORT: NFP: The Fundamental Giant - Babypips
REPORT: News Trading - Rick Wright
REPORT:News and Economic Data That Affect Forex Market Movements - Mario Sant Singh
VIDEO: Does Forex News Trading really work? - Jarratt Davis
REPORT: Two Cases When Trading News Events Goes Wrong - Yohay Elam















Editors’ Picks

EUR/USD remains under pressure above the mid-1.0800s, Fed rate decision eyed

EUR/USD remains under pressure above the mid-1.0800s, Fed rate decision eyed

The EUR/USD pair edges lower to multi-day lows around 1.0870 on the firmer US Dollar during the early Asian session on Tuesday. The Federal Reserve monetary policy meeting on Wednesday will be in the spotlight, with no change in rates expected. 

EUR/USD News

GBP/USD attracts some sellers below the mid-1.2700s, all eyes on Fed, BoE rate decision

GBP/USD attracts some sellers below the mid-1.2700s, all eyes on Fed, BoE rate decision

The GBP/USD pair remains under some selling pressure during the early Asian session on Tuesday. The uptick in the US Dollar above 103.50 and higher US yields provide some support to the major pair. Markets turn cautious ahead of the central bank meetings, including the Federal Reserve and Bank of England interest rate decisions.

GBP/USD News

USD/JPY rebounds firmly to 150.00 on the expected BoJ rate hike

USD/JPY rebounds firmly to 150.00 on the expected BoJ rate hike

USD/JPY rallied to test 150.00, as the Japanese Yen tumbled amid a classic 'sell the fact' trading on the hawkish BoJ decision. The BoJ lifted the interest rate by 10 basis points (bps) from -0.1% to 0% for the first time since 2007 and abandoned the YCC framework. 

USD/JPY News

Editors’ Picks

USD/JPY rebounds firmly to 150.00 on the expected BoJ rate hike

USD/JPY rebounds firmly to 150.00 on the expected BoJ rate hike

USD/JPY rallied to test 150.00, as the Japanese Yen tumbled amid a classic 'sell the fact' trading on the hawkish BoJ decision. The BoJ lifted the interest rate by 10 basis points (bps) from -0.1% to 0% for the first time since 2007 and abandoned the YCC framework. 

USD/JPY News

AUD/USD drops toward 0.6500 after RBA's steady policy

AUD/USD drops toward 0.6500 after RBA's steady policy

AUD/USD is extending losses toward 0.6500 in Asian trading on Tuesday. The Aussie Dollar remains offered after the Reserve Bank of Australia extended the pause while markets digest the less hawkish policy statement ahead of Governor Bullock's press conference. 

AUD/USD News

Gold price flat-lines above one-week low, awaits the crucial Fed decision on Wednesday

Gold price flat-lines above one-week low, awaits the crucial Fed decision on Wednesday

Gold price oscillates in a range and is influenced by a combination of diverging forces. Hawkish Fed expectations, elevated US bond yields and a bullish USD cap the upside. Geopolitical risks lend some support to the XAU/USD ahead of the key FOMC meeting.

Gold News

Bitcoin price shows weakness, but new BTC whales have created solid support at $56,400

Bitcoin price shows weakness, but new BTC whales have created solid support at $56,400

Bitcoin price downside momentum continues to gain strength, giving sidelined and late bulls a chance to buy the dip. The market remains focussed on the oncoming halving, expected to kick off the next bull cycle. For the meantime, however, spot BTC ETFs remain the main play in the market. 

Read more

Lots of tension ahead of this week's Fed decision

Lots of tension ahead of this week's Fed decision

Last week, we got a strong round of US economic data accompanied by hotter US inflation reads. The takeaway of course is that there might be a lot more pressure on the Fed to be looking to scale back its rate cut outlook at this week’s meeting.

Read more

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