Summary of news trading

Summary: Trading the News

There you have it! Now you know how to trade the news! Just keep these things in mind when trading:

• When you have a directional bias, you are expecting price to move a certain direction, and you've got your orders in already.
• It is always good to understand the underlying reasons why the market moves in a certain direction when news is released.
• When you have a non-directional bias, you don't care which way price heads. You just want to get triggered.
• Setups for the non-directional bias are also called straddle trades.

That's pretty much it...
Is it really that easy???

HECK NO!!!

You'll have to practice and trade many different reports before you get a feel of which news reports will make the market move, how much of a surprise is needed for the market to move, and which reports to avoid trading.Like in any other trading method, your success depends on your preparation.
This will take time and practice. Do your homework and study the economic indicators to understand why they are important.
Remember, nothing worth having comes easy, so stick with it and you'll find that trading news report will be very rewarding once you get the hang of it!

courtesy by www.babypips.com

Which News Reports are Trade-Worthy?

Before we even look at strategies for trading news events, we have to look at which news events are even worth trading.
Remember that we are trading the news because of its ability to increase volatility in the short term, so naturally we would like to only trade news that has the best market moving potential.
While the markets react to most economic news from various countries, the biggest movers and most watched news comes from the U.S.
The reason is that the U.S. has the largest economy in the world and the U.S. Dollar is the world's reserve currency. This means that the U.S. Dollar is a participant in about 90% of all Forex transactions, which makes U.S. news and data important to watch.
With that said, let's take a look at some of the most volatile news for the U.S.

In addition to inflation reports and central bank talks, you should also pay attention to geo-political news such as war, natural disasters, political unrest, and elections. Although these may not have as big an impact as the other news, it's still worth paying attention to them.
When our economic guru Forex Gump is in a good mood, he usually releases a Piponomics article on upcoming news reports that you can play and with trade strategies to boot! Check out some of his articles of this sort:
Trade the News This Week
4 News Reports You Can Trade this Week
Trade the U.S. Retail Sales Report With Me
Make Pips with this Week's Big Reports
Also, keep an eye on moves in the stock market. There are times where sentiment in the equity markets will be the precursor to major moves in the forex market.
Now that we know which news events make the most moves, our next step is to determine which currency pairs are worth trading.
Because news can bring increased volatility in the forex market (and more trading opportunities), it is important that we trade currencies that are liquid. Liquid currency pairs give us a reassurance that our orders will be executed smoothly and without any "hiccups".

1. EUR/USD
2. GBP/USD
3. USD/JPY
4. USD/CHF
5. USD/CAD
6. AUD/USD

Did you notice anything here?

That's right! These are all major currency pairs!
Remember, because they have the most liquidity, majors pairs usually have the tightest spreads. Since spreads widen when news reports come out, it makes sense to stick with those pairs that have the tightest spreads to begin with.
Now that we know which news events and currency pairs to trade, let's take a look at some approaches to trading the news.

courtesy babypips.com

Why news trade

Why Trade the News

The simple answer to that question is "To make more money!"
But in all seriousness, as we learned in the previous section, news is a very important part to the market because it has the potential to make it move!
When news comes out, especially important news that everyone is watching, you can almost expect to see some major movement. Your goal as a trader is to get on the right side of the move, but the fact that you know the market will most likely move somewhere makes it an opportunity definitely worth looking at.

Dangers of trading the news

As with any trading strategy, there are always possible dangers that you should be aware of.
Here are some of those dangers:
Because the market is very volatile during important news events, many dealers widen the spread during these times. This increases trading costs and could hurt your bottom line.
You could also get "locked out" which means that your trade could be executed at the right time but may not show up in your trading station for a few minutes. Obviously this is bad for you because you won't be able to make any adjustments if the trade moves against you!
Imagine thinking you didn't get triggered, so you try to enter at market... then you realize that your original ordered got triggered! You'd be risking twice as much now!

You could also experience slippage. Slippage occurs when you wish to enter the market at a certain price, but due to the extreme volatility during these events, you actually get filled at a far different price.
Big market moves made by news events often don't move in one direction. Often times the market may start off flying in one direction, only to be whipsawed back in the other direction. Trying to find the right direction can sometimes be a headache!
Profitable as it may be, trading the news isn't as easy as beating Pipcrawler at Call of Duty. It will take tons of practice, practice and you guessed it... more practice! Most importantly, you must ALWAYS have a plan in place. In the following lessons, we'll give you some tips on how to trade news reports.

courtesy babypips.com

news trading

Importance of News

It's not enough to only know technical analysis when you trade. It's just as important to know what makes the market move.
Just like in the great Star Wars world, behind the trend lines, double tops, and head and shoulder patterns, there is a fundamental force behind these movements. This force is called the news!
To understand the importance of the news, imagine this scenario (purely fictional of course!)
Let's say, on your nightly news, there is a report that the biggest software company that you have stock with just filed bankruptcy.
What's the first thing you would do? How would your perception of this company change? How do you think other people's perceptions of this company would change?
The obvious reaction would be that you would immediately sell off your shares. In fact, this is probably what just about everyone else who had any stake in that company would do.
The fact is that news affects the way we perceive and act on our trading decisions. It's no different when it comes to trading currencies.
There is, however, a distinct difference with how news is handled in the stock market and the forex market.
Let's go back to our example above and imagine that you heard that same report of the big software company filing bankruptcy, but let's say you heard the report a day before it was actually announced in the news.

Naturally you would sell off all your shares, and as a result of you hearing the news a day earlier, you would make (save) more money than everyone else who heard it on their nightly news.
Sounds good for you right? Unfortunately this little trick is called INSIDER TRADING, and it would have you thrown in jail.
Martha Stewart did it and now she has a nice mug-shot to go along with her magazine covers.
In the stock market, when you hear news before everyone else it is illegal. In the forex market, it's called FAIR GAME!
The earlier you hear or see the news, the better it is for your trading, and there is absolutely no penalty for it!

Add on some technology and the power of instant communication, and what you have is the latest and greatest (or not so greatest) news at the tip of your fingers.
This is great... Uhmmm... "news" for retail traders because it allows U.S. to react fairly quickly to the market's speculations.
Big traders, small traders, husky traders, or skinny traders all have to depend on the same news to make the market move because if there wasn't any news, the market would hardly move at all!
The news is important to the Forex market because it's the news that makes it move. Regardless of the technicals, news is the fuel that keeps the market going!

courtesy babypips.com

Best time of week when U can trade

Best Days of the Week to Trade

So now we know that the London session is the busiest out of all the other sessions, but there are also certain days in the week where all the markets tend to show more movement.

Below is a chart of average pip range for the major pairs for each day of the week:

Pair	Sunday	Monday	Tuesday	Wednesday	Thursday	Friday
EUR/USD	69	109	142	136	145	144
GBP/USD	73	149	172	152	169	179
USD/JPY	41	65	82	91	124	98
AUD/USD	58	84	114	99	115	111
NZD/USD	28	81	98	87	100	96
USD/CAD	43	93	112	106	120	125
USD/CHF	55	84	119	107	104	116
EUR/JPY	19	133	178	159	223	192
GBP/JPY	100	169	213	179	270	232
EUR/GBP	35	74	81	79	75	91
EUR/CHF	35	55	55	64	87	76

As you can see from the chart above, it would probably be best to trade during the middle of the week, since this is when the most action happens.

Fridays are usually busy until 12:00 pm EST and then the market pretty much drops dead until it closes at 5:00 pm EST. This means we only work half-days on Fridays.

The weekend always starts early! Yippee!

So based on all these, we've learned when the busiest times of the market are. The busiest times are the best times to trade because they give you a higher chance of success.

Managing Yo Time Wisely

Unless you're Edward Cullen, who does not sleep, there is no way you can trade all sessions. Even if you could, why would you? While the forex market is open 24 hours daily, it doesn't mean that action happens all the time!

Besides, sleep is an integral part of a healthy lifestyle!

You need sleep to recharge and have energy so that you can do even the most mundane tasks like mowing the lawn, talking to your spouse, taking the dog for a walk, or organizing your stamp collection. You'll definitely need your rest if you plan on becoming a hotshot trader.

Each trader should learn when to trade.

Actually, scratch that.

Each trader should know when to trade and when NOT to trade.

Knowing the optimal times you should trade and the times when you should sit out and just play some Plants vs. Zombies can help save you a pound of moolah (pun intended).

Here's a quick cheat sheet of the best and worst times to trade:

Best Times to Trade:

• When two sessions are overlapping of course! These are also the times where major news events come out to potentially spark some volatility and directional movements. Make sure you bookmark the Market Hours cheat sheet to take note of the Opening and Closing times.
• The European session tends to be the busiest out of the three.
• The middle of the week typically shows the most movement, as the pip range widens for most of the major currency pairs.

Worst Times to Trade:

• Sundays - everyone is sleeping or enjoying their weekend!
• Fridays - liquidity dies down during the latter part of the U.S. session.
• Holidays - everybody is taking a break.
• Major news events - you don't want to get whipsawed!
• During American Idol, the NBA Finals, or the Superbowl.

Can't seem to trade during the optimal sessions? Don't fret. You can always be a swing or position trader. We'll get back to that later. Meanwhile, let's move on to how you actually make money in Forex. Excited? You should be!

Courtesy babypips.com

Best time frame for trade

The Best Time Frames To Trade Forex

This is a question that most new traders should have in their mind when they first get in touch with trading. However I do not think that there is such a thing as the best time frame as it all depends on your trading strategy and needs.

Trading Strategy
If you are a scalper, you will definitely be dealing with low time frames like the 1 min and 5 min chart.
If you are a day trader, you will be using the 15 min, hourly and at most the 4 hourly chart.
If you are a position trader, you will be using the 4 hourly, daily and even weekly chart as you are planning to hold your trade for long term.
The bad thing about the lower time frames like the 1 min and 5 min is that they produce a lot of noises and this alone can be a nuisance to some traders. Therefore if you are looking to trade with lesser noise, I will suggest that you go with higher time frames like the hourly or 4 hourly chart.

Needs of Traders
I understand that there are some traders who are still working a day job and therefore do not have much time to look at the chart.
For those of you who do not have much time to spare, I will suggest that you go for higher time frame chart like the 4 hours as these allow you to have more time to prepare for your trades.
Personally, I tend to look at the higher time frames to look for trading opportunity as it has lesser noise and then go to the lower time frame like the 15 minutes chart to look for the best entry.
As for your question on whether technical analysis is better or fundamental analysis. I personally is a technical trader, I find it easier to trade with as the fundamental involves a lot of trader sentiments in it.
For particular news, some traders will think that the market is going to rise but there will definitely be another group of traders that think that the market is going to fall. This alone makes it hard to trade the news. However I do know of some traders who are making money with news alone.
The above are my personal opinion and if you have anything to add, do feel free to give your comment below.

GBP/USD. 31.11.2011

Today GBP/USD  is sideway.

So trade with support and resistance break.
if price goes below 1.5500, go for sell.

If price goes above 1.5645, go for buy.

in every trade tp 50 pips, sl 25 pips.

*** Support and resisitance theory is the best theory amoung forex, theory***

with thanks.