How I Trade The News (Tools, Setup, Source) - Part 2

In the previous part i outlined some basic facts about News Trading, and the major currencies/investments that attracts investors, which drives the market.

This section reveals step by step guide on how i trade the news with sample illustrations. The first step is the introduction of some vital materials i use.

1st Step: Setup Materials
The charts below illustrates some tools i used to setup my chart to get prepared for news release.
 Click image to enlarge...
 Click image to enlarge...

The 1st picture shows a sample of my chart setup containing some tools that alerts me when a news is about to be released at a specified time configured by me. It also keeps me informed of upcoming and past news events. The setup also contains a dynamic Support & Resistance Indicator as well as a dynamic Pivot Point, which acts as a guide to help me study the psychology of the market and to locate the best places to place orders. The One Click Trading
One Click Trading
tool is also part of the chart setup. I use it to place quick order(s) during a quick counter retracement or to trade spike trade reversals.

Download My Trade Setup Indicators Here:


The 2nd chart is a little different from the the 1st chart only for the news economic tool which displays the actual release on the chart. However the release is not as fast as other 3rd party news engine sources, so i rarely use it.

Other important resources:
1. Forex Factory
2. My personal News Calender on my blog.
3. Henry Liu's pre-news analysis
4. News Trading EAs (I seldom use them)
5. Cable/Satelite Network (for live speeches, press release, interviews, e.t.c.)

2nd Step: Get Pre-News Release Schedule 
I get this weekly from several sources to get me prepared adequately. When reviewing the news calendar or schedule for the week I put more interest on the impact and the time schedule. Getting this information on a Sunday before the beginning of the working week is the best. It helps me to plan adequately for the week or days ahead most especially for midnight news release due to my geographic location.
Apparently there are far lesser economic activities on Sundays around the World except in some Asian Markets.
Lookout for daily analysis of the news release hours or if possible a day before. Henry Liu's pre news analysis is one of the best i can recommend. Apart from analyzing the expectations of the news release, they offer trade guidelines on the best pairs to trade.   

High impact news are the best to trade. However their impact is still subject to amount of data released. So not all of them could be profitable. Therefore take the advise or guidelines of pre-news analysis from experts seriously.

HotForex Best brooker

3rd Step: Watch For Signs Prior To The News Release
Watch out for certain market signs that indicates the likeliness of a possible high impact or apparent closeness to a news release. See some of the signs below:

- Narrow price movement extending for hours before the news release.

    - Pre-news reaction. In some cases there is a slight or consistent push in the market arising from traders sentiments towards the expected outcome of the news release. Be very careful with this sign. It's most often seen with an engulfing candle pattern.

    - A very slow or an abrupt halt in the market movement. It is what i call the market quiet time. This sign means the market participants (i.e. bulls/bears) are waiting earnestly or holding back for an important information, which would decide the long or short term direction of the market. It's one of the major positive sign of an upcoming news release with a very high impact. This sign helps me to detect which pairs are likely going to have a greater impact.

    - Inconsistent and continuous series of candle patterns (doji's, hammers, inverted hammers, kickers, e.t.c.). The inconsistent candle patterns is a display of the irrational reaction of the market to an upcoming news release.

    4th Step: Place Orders
    100% BonusThis should be done systematically. You need to understand the signs, and market behavior before placing orders. There are cases where your orders would be triggered at the wrong time due to what i call tremor of the market (i.e. mini shocks before the real impact). So placing of orders is a dynamic thing. It might require constant modification until the news release.

    News release accounts for a higher percentage of market volatility, and hence can cause irrational price feed lags, which results to error messages such as "Trade Context Busy", "Invalid SL/TP", "Requote", platform hang, e.t.c. More often traders blame their brokers for this but it is not entirely their fault. The steps presented here reveals a way out of this problem.

    In the final part we will learn which pairs are the best to trade for a particular news release, and how to place orders and manage them.

    Meanwhile i recommend looking up on our article: Forex Currency Pairs & How They Relate.

    Watch out for Part 3.

    Image (News Dice) courtesy of Stuart Miles /