"Forex News Trading can be extremely profitable if you have an understanding of fundamental analysis and have access to low latency Forex trading software." - FNG (Forex News Gun)
Since the beginning of this year we've noticed a higher percentage of fundamental factors driving the market much more than the technical factors. It is obvious that investors are currently paying more attention to issues like quantitative easing, rate hikes/cuts, fiscal tightening, Job market, and other economic key factors in the Global market.
While reviewing search index on news trading systems, we found out that most traders are on the lookout for straddling, and auto click news trading systems. The question is which of them is better? This article clearly compares, and brings out the true potentials between both systems.
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See: Top 6 News Trading EAs & Software Applications
What is Straddling?
Straddling is a trading strategy where an order is placed above or below the market current price or two orders are placed in an opposite direction of the current price prior to a news release in anticipation that price would move in favor to either of the positions. In most cases the investor is not sure of the direction of the market's next immediate movement.
What is Auto Click News Trading?
Auto click trading systems are semi automated tools, which triggers the buy or sell button on your trading platform as fast as milliseconds. They are designed to trade fast news spikes.
BASIC DIFFERENCES AND WHAT YOU SHOULD KNOW ABOUT THEM
NB: Both systems comes indifferent forms like expert advisers, scripts, manual systems, stand alone client systems, executable programs, signal services, e.t.c.
| Parameters | Straddling | Auto Click |
|---|---|---|
| How It Works | It uses a client/server technology. The server is the core system which handles the news feed, client data, and news trading strategy. Signals are sent from the server to the client app, which is mostly in the form of an EA, Indicator or Scripts installed in the trader's (subscriber) trading platform. The client app connects to the server from the trading platform where it picks the signal to straddle the news release. Other functions such as deleting and modifying orders can be controlled from the server or the client system. | Some auto click news trading systems utilizes the client/server technology. However quite a number of them are 100% client based (i.e. they depend on the platform's news source or other news source programmed in the system). The system generates its decision to buy or sell through its inbuilt logic, which checks the difference between the forecast and previous figures to ascertain if the deviation figure is met. When the condition is met the application uses an API function to detect the coordinates (position) of the buy/sell button of the order window to activate a buy or sell order. |
| Accuracy/Precision | Much more accurate than auto click systems because they are rarely exposed to requotes, slippage and latency issues. You stand a better chance to get good fills since pending orders are set on the client platform, and activated in the broker's server. | There are issues with accuracy and precision because it places market orders which are subject to latency, slippages, requotes, and other broker/platform issues. You can get a very fast click but a late entry and bad fills from the broker. Sometimes the high impact of the news can make the market move in lightning speed which sometimes is much faster than the auto click system thereby causing inaccurate entries. |
| Speed | Straddling systems do not necessarily require speed to trade the news when compared to auto click systems. However speed is a factor but not too necessary. Although most of them come with options to place orders in few minutes or seconds before the actual news release. In terms of speed auto click systems are much faster. | They are primarily designed to trigger the buy or sell button of the trading platform in milliseconds if the conditions for a news release is met. Speed is an essential requirement for auto click news trading systems. However you cannot guarantee a good fill or exact lightning entry for some news release with lightning spikes. |
| Broker | Straddling systems generally work with all brokers that allows news trading. However it might not be suitable for some brokers who deliberately frustrate news trading. | They're mostly standalone applications and are therefore not limited to broker platforms unless the trading platform uses complex or complicated order window. |
| News Source | More often utilizes news source from its server only. | Auto click systems are capable of utilizing platform news source, external news source, user news source, and the news source from its server. |
| VPS | Works effectively in a VPS | Not suitable for VPS since it requires trader's intervention. |
| Automation | Fully automated | Semi automated |
| Simplicity | Very easy to use. The system handles virtually all the trading process. Its a set and forget system. | Not as easy as the straddling systems. It requires you to enter the news inputs all the time, and also set the trading platform for it to work. |
| Protection | Very good in-built protection in terms of deleting orders if triggers (deviation) is not met, and trade management (TP, SL, BE & TS). However certain sharp reversals and counter reactions cannot be fully managed. | In-built protection is quite low especially for some platforms that do not allow placement of Stop Loss and Take Profit for market orders. This is very risky for counter or irrational spikes. You have to manually manage the trade or use trade managers. |
| Profitability | Straddling systems are more profitable based from experience, and system reviews. They are designed to trade all kinds of news. | Auto click systems are most often designed to trade spikes, and other news types. They are profitable but not as much as straddling systems. |
News trading can be very lucrative but at the same time very risky due to extreme volatility. But with the right tools and good broker you can make the best out of it. Feel free to contact us for some of these tools, which would help you get prepared before the news release occurs.
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