Simple news trading strategy

News trading is a style of trading where a trader makes his trading decisions based on economic news releases. The great advantage of trading the news is that you can be very successful in relatively short period of time. This style is perfect for those who can't dedicate themselves to the trading on full-time basis.

Economic news calendar can be found at investing.com and fxstreet.com. Impact column in the calendar shows how big volatility is expected upon the release of the news. Three other important columns are: Actual, Forecast and Previous. Previous shows the the indicator data for previous period. Forecast shows the expected indicator value; Actual is the news release.

So, what is causing big price movements? Well, it is a surprise. In this context the surprise is the difference between foretasted and actual value. We can see that actual value is sometimes shown in red, sometimes in green and sometimes in black. What does it mean? Green means that actual value is better than expected and it will cause bullish movement for the currency, on contrary red means that actual value is worse than expected and bearish movement is expected. Finally, black means that value is within expectation and currency should not move.

So, how to trade the news? Choose the pair that is consisted of currency for which the news will be released. Then, 30 to 45 seconds before the news release put one buy stop order 8 to 12 pips higher than actual price and one sell stop order 8 to 12 pips lower than actual price. When the news is released one stop order should become active (if the actual value is not in expectations). Then cancel the other stop order and close (or leave for few minutes or more) the active order. When you are satisfied with the gain close the order. If the news release did not cause the price movement cancel the both stop order and wait for other news release.

I advise you to try this strategy on demo account first, and then you can move to live account. If you sign-up to this blog by email, I will send you a script that is automatically placing stop orders.

Happy trading!    

Manual Trading vs Automated Trading

There is a constant debate which type of trading is better: manual trading or automated one (using EA robots)? Well, while surfing on the Internet you will find different opinions about this subject. Some would opt for manual, while other will say automated one and both sides will have good arguments to support their stance.

After being an active participant on the Forex market for several years and having tried both techniques I would say that both are good. Actually, the right question should be: Which style suits you better as a trader? The fact is that EA robot cannot replace human thinking, but also robots are not affected by greed and emotions, two big human weaknesses that affect the traders. The robots can work on the market for a longer period of time and they won't miss a trade due to lack of concentration. Also, the truth is that the experienced human trader will earn more than a robot.

So, which style to choose? Well, it depends about you. If you can overcome greed and emotions, if you can trade in full discipline following the the rules set previously and if you can fully dedicate yourself to the trading, than chose manual one. But if you see trading as a second job, if you are vulnerable to greed and to emotions, automated trading will be the one for you.

For those that chose automated trading there are two options left: you can create your own EA robot using MQL or any other programming language, or you can buy one. But be careful, if you decide to buy a robot because there are very few commercial ones that can trade profitably. Lots of scam is offered on the Internet. So, I advise you to find an independent review before you decide to buy a robot.