Every day, every week, every month, various economic news announcement are released from the FOREX calendar for market participants and investors to use in making profitable trading decisions. An economic news release has only 2 roles it plays in the market which are continuing the current trend or reversing the current trend. Economic news releases provides an easy access to make use of tight stop losses and aiming exponential take profits. Only high impact new release can be traded with this strategy and then we incorporate a little technical analysis of price action into the system. This can be a tremendous way of doubling one’s account over a short period of time but however there are rules to making this come into reality. The best signals are signals that blend with the general trend when the news is been released.
– Only High impact economic news should be traded like Interest rates, Employment Statistics, Meeting Minutes, GDP’s, CPI’s, PMI’s, Press Conferences etc.
– Price action and Pull backs must be considered after the news announcement.
– For a better confirmation for entries, a reasonable deviation must be between the actual and forecast numbers.
– To get maximum pips, its best to trade news releases that are inline with the current trend, most especially daily trends.
ENTRY RULES FOR TRADES:
-Use only your 1 minute charts to see a better view of the market.
– If the 1st minute spike is 30 pips and above when the news is released, then it is a good release investors are interested in.
– If the news is a number release, i mean has a number for actual and forecast, check if the difference between the numbers deviated well. Trigger deviation for Employment Statistics are 20k, for GDP’s and CPI’s are 0.2%, for PMI’s are 2.0/2.5 etc.
-If the 1st minute spike candle after the release doesn’t form a rejection price action pattern with long wicks or pin bar, then its a good release.
– If the 1st/2nd minute candle in total doesn’t retrace 35% of the initial spike of the 1st minute of the news, then the momentum of the release is intact.
– If all these conditions are met, you can open a deal towards the direction of the initial spike.
EXIT RULES FOR TRADES:
-If there’s a conflicting figure in the news release, its a no trade.
-If there’s a conflicting revision for the previous number, then its a no trade
-If there’s a 35% pull back of the initial spike in the 1st minute + 2nd minute, then its a no trade.
STOP LOSS AND TAKE PROFIT:
– I recommend not more than 15 pips stop loss maximum
– Default take profits should be 30-40 pips depending on how strong the news release is.
– If you want to be an aggressive trader, you can aim 70-80 pips(aim if the news announcement is in line with the current trend.
Below is an example of FOMC Statement, BOJ Monetary Policy Statement, ECB Press Conference(released yesterday), USD Advance GDPq/q. This is back testable and you will be surprised how easy Forex news can be traded even without pending orders or auto-clicks or hedging strategies.