How to Trade Forex During the News Time - Forex Scalping at the News Release Time
FOMC was released today (August 12, 2009) at 2:15 pm EST and we saw a sudden 130 pips movement. I know there is a question in your mind that if you could take the advantage of that movement or not. In other word, could we trade the FOMC news?
I’d like to tell you how to trade forex using the news like FOMC and also any other news, but before that let me tell you that professional traders don’t think about trading these kinds of news. Some swing traders use the long term economic news to trade but the news release like we had today are nothing but noise (in most cases). If you don’t believe in what I say, just take a look at the current daily candle and you will see that there is no significant change on the daily candle and daily chart is moving on the way that it was used to move. So this 130 pips movement was just a noise. Usually a few hours after the news, market goes back to the direction it was following before.
I do not trade news personally because there is no reason to do that. We are making decent profit through our regular trading style. Why should we want to trade the news then? I always try to control my greed and make it limited because greed is the most important cause of traders’ failure. While I can make money through normal trading, I don’t think about making some pips in a few minutes after a news release. News release time is a risky time to trade. Market movement can not be predicted and on the other hand, in many cases brokers are not able to execute the limit and stop orders during the news time and this can be a disaster. You may have already seen many other articles about news trading that encourage you to trade forex during the news release time but please note that most of the screenshots you see on those articles are chosen from the best possible conditions and movements that a news release might have created. Those examples can not be repeated anytime that there is a news release.
However, it doesn’t mean that we should not even know how to trade news. Just in case someone asks about it, we should be able to help the questioner to make/lose some money during the news time 
When there is an important news (like FOMC) on the way, as we don’t know what direction the forex market will choose, we should place pending orders. About 20 minutes before the news release, we should find the last high and low on 5min chart. Usually the forex market becomes so slow a few hours before the news release. It moves in a narrow range. This range has a high and a low. On the below chart, which is the GBP-USD 5min chart, the last high is 1.6560 and the last low is 1.6505. You should place a buy pending order 10 to 20 pips above the last high (line #2) and a sell pending order 10 to 20 pips below the last low (line #4). Your buy order stop loss will be few pips below the last low and your sell order stop loss will be few pips above the last high.
The other thing that your orders should have is a trailing stop loss. You should have a 20 pips trailing stop loss. So when your position is 20 pips in profit, stop loss will be moved to breakeven. Then, for each pip that your position moves to the favorite direction, your stop loss will be moved one pip further. Stop loss will keep a distance of 20 pips with the market price until the market changes the direction and triggers the stop loss.
The last thing is that as soon as one of your pending orders is triggered, you should cancel the other one.
This is how you could trade today’s FOMC and make about 40 to 50 pips. But news trading is not always profitable. Sometimes market goes up and triggers your buy order and then goes down and hits the stop loss before your trailing stop moves the stop loss to breakeven. We use a 10 to 20 pips filter above the high and below the low to avoid this but sometimes it happens. Also sometimes brokers servers will not be able to move the stop loss orders or even execute them because of the sever overload they have during the news time.
Further Reading:
- Forex Basics:
What Is Forex and How to Make Money with It?
Is Forex a Suitable Business for Everybody?
When You Will Be A Professional Forex Trader?
Currency Pairs Explained - Understanding the Currency Pairs in Forex Trading
Currency Pairs Correlation in Forex Market: Cross Currency Pairs
How to Choose the Best Currency pairs for Forex Trading
What Thomas Edison Can Teach You about Trading Forex!
A
Letter from God to Forex Traders!
Ten
Important Forex Trading Tips
- Money Management:
Money Management is a Critical Part of Forex Trading
Risk/Reward Ratio in Forex Trading
How to Make $53,000 per Month through Forex Trading
Where Is the Best Place for Stop Loss and Limit Orders?
When Should You Get Out of a Bad Position?
- Candlesticks:
The Language of Japanese CandleSticks - The Only Real Time Indicators
Doji Candlestick - Doji Star - How to Trade Using Doji Candlestick and Bollinger Bands
What Is Heikin-Ashi and How to Trade with It?
- Price Chart:
Forex Charts - How to Use Different Types of Charts in Forex Trading
Renko Chart - How to Trade Using Renko Charts
- Technical Analysis:
How to Use Technical Analysis in Forex and Stock Trading?
How to Trade Using Trendlines, Head and Shoulders, Triangles, Double Tops and Bottoms, Flags, Pennants, Wedges...
How to Use Moving Averages in Forex Trading
How to Use Pivot Points in Forex and Stock Trading?
How to Use Bollinger Bands in Forex and Stock Trading
How to Use MACD or Moving Average Convergence / Divergence in Forex and Stock Trading
How to Trade Forex During the News Time
- Fibonacci:
How To Use Fibonacci Numbers in Forex and Stock Trading
More About Using Fibonacci in Forex Trading
How the Forex Market Reacts to Fibonacci Levels
- Tools, Indicators and Templates to Download:
Download Heikin Ashi and Smoothed Heikin Ashi Indicator and Template for MetaTrader
Have All timeframes on One Single Chart in Your MetaTrader Platform (MT4)
Hi Vahid,
When it comes to pending orders, what about the new nfa Hedging rule?
I tried to put both buy stop and sell stop but my broker didn’t allow me to do that.
Perhabs i’m misunderstanding something here..
Thanks
Beggi.
Hi Beggi,
Pending orders are ok because when one of them is triggered, the other one will not be executed if your broker is under the NFA ruling. Sometimes when two pending orders are so close or you have not calculated the stop loss and target correctly, the platform doesn’t accept them. You have to revise the values and then try again.
You have to chose a broker with office outside US.
Robert
Hi Vahid,
could you please direct me to the website page or tell me what are the times in EST do you trade and send out signals.
Thanks alot
King
Hi King,
Everything is explained here: http://www.forexoma.com/live-market-analysis-program/
Please take a look and let me know if you still have any question.
Thank you vahid,
ok you said we should demo your service first for a few months. My question is, is it possible to demo your service for atleast 1 month free of charge? That will surely give us confidence and exposure to your systems and how the reports works.
Thanks
Hi King,
I said those who are really new to the forex world and do not know even how to place an order, should demo trade when they join my program. Just to learn a little about forex basics to prevent any possible mistake.
I do not offer any demo for my program because there is no risk for it. It is only $100 per month which is not a big deal for those who want to trade forex because forex trading is nothing but taking risk and those who want to trade forex, should be able to risk a $100 for a month. If they can not do that, they’d better to forget about forex trading.
Compared to all the money I wasted on junk forex courses and training, $100/month is a bargain for your service Vahid.
A noob with a mini account should be able to earn the cost of the service easily with just the signals emailed to us.
Thanks Jim
I am using some kinds of filters in this program to let only those who know what forex is all about, join and use the program, otherwise I would have to spend most of my time arguing and answering some questions that a beginner trader should already know. Those who have already spent a few years on forex and they have signed up for some other courses and buy-sell signals are more preferred because they understand me and my program better.
Best regards,
Vahid
Hi Vahid
I totally understand what you are saying. Well I am one of those customers you are looking for who had used other service and got scammed. I have being trading for 3 years now. I am trying to understand the market and creating a trading method that would be successful atleast 60%. Unfortunately, that is not the case.
Also, I am not new to your website. As a matter of fact it is because of your website why I use bollingeer bands in my trading. I love it but is like I am not using it properly.
You said I can start trading with $1000 using your service with an aim of 25% monthly. Do you mean using a mini acccount with 0.1 pip value or a standard account with $10 pip value?
Finally, which broker do you recommend to join? As you know there are a lot of dishonest broker out there. Do you have any mind.
Thanks alot Vahid
KIng
Hi King,
Good! You can be one of our trading buddies so
You can start with a $1000 account and trading mini lots like 0.05 or 0.1. I can not guarantee anything because it is illegal but you can see than we are doing good. The performance reports I have on my site are true because if they were not, this website would be full of objections. As you see I do not moderate comments and they appear on the site right away.
For a small account like $1000, FxPro is good but you can not trade lower than 0.1 with it. To trade less than 0.1, Alpari.co.uk should be ok.
Hey Vahid,
With your daily reports, all of those potential trades should be set up using pending orders or they require me to sit in front of my computer and wait for the set up?
Thanks
Hi KIng,
We don’t use pending orders. You don’t have to sit at the computer. I email the members when there is a trade setup and also our report platform plays some sounds. So you just need to have the platform open on your computer and it will alert you when there is a trade setup.
OK,
SO basically I need to be near the computer from 10am to about 5pm to get the alert?
Thanks
King
We can have a trade setup at anytime 24 hours a day.
SWEET!
I am looking forward in trading and learning from you. I am reading your money management article now.
By the way, what is the time frame do you read your message and answer them?
KIng
from 8am to 8pm EST.
But is way after 8pm now…: )
I am sorry to keep you up so late. Well goodnight and I will keep you posted on my status with your service. Thanks alot
King
Hey King, if you have been trading in 3 years and have had no success so it is important for you to learn bacis from the beginning.
Start with a micro account the first few months.
After 3 years you should know that if you have $ 1000 and open a standard account that mean 100 Pips and then you are out of game.
Very simple rule do not use more than 2% of your account on each trade.
All you need to know.
You can find an article about money management in the archive.
I think the selection of broker has less significance. But part brokere requires minium 2000 $ dollars in initial capital to open the account.
FXCM has micro account.
Robert
Thanks Robert
Hey Robert
Thank you for your words. I know FXCM has micro account but it is not compatible for the MT4 platform. I have tried the demo of the micro account and it is very confusing. All my trading years I am used to MT4. So I was thinking about fxpro just to start with. Who are you using?
Thanks
King
Hey king You have a lot of forex brokers.
Here are some Mig, Dbfx, Fxcm.GFT, Swiss fx. Here is some advices if you will learn trading in a proper way I guess like me it is long time last time you went to school,
Here is a good study technique that I use Take the article for the article that you find here in Forexoma.
Then, create question that takes up all pages that the theme is all about, then write down the answers to your questions. When you feel you’ve mastered the answers. Exam
Let a person graduated you, where you must answer orally right on all issues, on the way, you must explain verbally when you feel you’ve mastered this.
Then continue for the next theme. In other words, the best way to learn is to teach others about what you will learn .
Where is more demanding than just read about the material. So my lady is deadly tired everything that has with forex.
Next Council King do not focus on how much you can earn in forex trading. if you earn 5% a month, or 25% or minus 5%. The most important thing is to focus on becoming a better trader. Disillusion traders loves to focus on the word scam, bad brokers, every aspect that is something negative over. Use all your focus on being positive .
Robert
Hello Vahid ..
Regarding to trade around news release, where I slightly disagree with you.
To trade by major news is one kind of trading
I think the day traders will have a great advantage to consider major news release as part of their day trading strategy.
I assume to day trade is to take profits on the “noise” that is produced during the day.
News release may be a trigger for a kind of strong movement in any direction.
If you take the medium and major news release and make a vertical line on the chart at the time of release starts so it is surprising many times the course amplified or changes direction around release time.
The same phenomenon will you see often when London or Ney york opening time.
A Question Vahid
I read somwhere that a consolidation can take from one-third to two -
third the time of a
preceding advance or decline. But then occasion, it can
reach to 100%.
Is that correct to say and a thing to have in the back head when you trading?.
Some examples how the news affect currency rates around the news release between 10-14 August.
Often the news will have a major impact on a couple of currency pair , others do not.
The art is to choose the right currency pair.
Tue 11. GBP Release 0930
EUR / GBP - change direction
GBP strengthened. 40 Pips
GBP / CAD – change direction 150 Pips
Wednesday 12-0930 GBP Release
GBP / YEN GBP strengthened
change direction. 300 Pips
CAD and USD 1330 release
USA / CAD CAD strengthened ,
change direction 140 Pips
CAD / JPY … … … . 120 Pips
Cad / Euro … … … … … … 120 Pips
Aud / USD Aud strengthened,
change direction 120 Pips
Thursday 13 Eur release-0700 and 1000
Eur / Yen - o7oo Eur strengthed 250 Pips
1000 Eur weakened change
direction 150 pips
EUR /CHF-o7oo Eur
strengthened 70 Pips
EUR / CHF-1330 Eur weakened
Friday 14 USD release 1330
Aud / USD USD strengthened,
Change direction 100 Pips
Eur / USD USD strengthened,
Change direction 80 Pips
USD / CAD USD strengthened,
change direction 140 Pips
USD / CHF
USD strengthened,change
direction 60 Pips
Robert
Hi Robert,
You are right. I know some traders are interested in news trading and they are successful in it. I personally don’t do it because I use big time frames like 4hrs, daily and … .
Regarding your question about consolidations, usually they should not be bigger than 20 to 30 pips in any time frame. When they become bigger, they can not act as consolidation and so continuation or reversal patterns. They just will be continued as a range and their breakout will not be reliable.
Hope this helps
Hello Vahid I think I explained my bad.
I read this article today from Marthine J. Pring
And was wondering if you had registered the phenomenon and had some thought about it .
http://www.betalmal.net/book/pt.pdf
See page 3.
Marthine Pring claim that a bearish or bull rally and if it form a consolidation the consolidation will usually have a time duration between 33% -66% and sometimes up to 100% of the time uptrend or down trend lasts, until it eventually breaks out in one or another direction.
This means that a consolidation after an uptrend will generally last longer then a consolidation after a down trend and I assume it is a statistics advantage to know how long time a consolidation would normally last. Hey there was a lot of writing today sorry. I have time to read trading books in the weekend
Robert
Here is his book
he swear to the good old technical analysis
Take a look at page s13 is a very good illustration on the different from trade day trading to long therm
http://books.google.com/books?id=KYqEYbA6RR8C&dq=Martin+Pring+on+price+patterns:+the+definitive+guide+to+price+pattern+free&printsec=frontcover&source=bn&hl=en&ei=rSmGSsiNEMeE-Qaj6aW7CQ&sa=X&oi=book_result&ct=result&resnum=4#v=onepage&q=&f=false
Hi Robert,
Thanks for sharing this. I took a quick look at the first link/article. It looks like a nice and informative article to me and I will read it word by word when I have time.
Regarding the consolidations, I must say YES. It is important to know that a consolidation is not matured and so you will not get in too early. And this is also true that a consolidation lasts longer in uptrend because generally uptrends are slower than downtrends. Greed is the dominant emotion in uptrends whereas in downtrends, fear is the king and as fear is stronger than greed, so consolidations last shorter in downtrends.
Vahid,
from your 14 july report figures, do they include spreads for the currency pairs?
King
King,
That list is the real positions we reported and took. When you buy, you should pay the spread right away. And when you are short and you buy to close your short position, you have to pay the spread. So spread is included in all those trades.
You make me laugh King
Hey Vahid,
How are you?
Could you give me a detailed example as to how your trade setup will be like in your signal reports? For example, if you give a picture of a trade setup chart explaining what might happen, do you also suggest when to buy/sell and the appropriate stop and limit figures?
King
Also, I am asking for a free trial of your service to see if I will be able to follow it properly before I do it as a paid version
Thanks Vahid
King
As I already mentioned, we don’t offer any free trial.
Hey Vahid
I am sorry, I didnt know I asked you this question before. Forgive me my friend.
King
It is ok
Hi King,
Here is the example of the signal I email to the members:
GBP-USD Short (Sell)
Our Entry: …
Stop loss: …
Target 1: … (… pips)
Target 2: … (… pips)
Hey Vahid
So in the email along with this signal, you will give explanations as to why you are taking this position or it will be available on the website?
Thanks
King
Exactly
Vahid,
I am curious!
With a $1,000 mini account which offers $1 per pip and using the 2% rule, means that we are risking $20 for the trade. You recommended to beginner traders that they should pick one setup trade from the set of setup trades you send out. With this rule, are we still able to gain atleast 25% a month?
Also, from your july 14 reports, if we only take one trade from the set, could we be able to gain that much pips? On the otherhand, if we enter all those trade setup, we wold be over trading our account which is not smart, isnt that so Vahid?
Please reply
Thanks
King
Hi King,
It seems you don’t read the articles carefully. Please read the money management article once again and you will see that you have not considered one thing (at least). Trading 2% doesn’t mean what you think. Each trade has different stop loss orders and so the position sizes have to be calculated for each trade.
The July report includes exactly one trade at a time. If I wanted to report all the positions that I reported but we didn’t take because we already had an open position, the total number of pips for July could be over 5000 pips. And that report covers from the 14th to the end of July. This is also something that I have explained on that report.
So the answer is yes. You could make much more than 25%.
Best regards,
Vahid
Thank you Vahid
Well said and I understood.
KIng
You are welcome King. If you have any other question, please don’t hesitate to ask.
HEy Vahid,
Did I tell you
I joined your discussion forum
YEAAAAAAA
King
Hi Vahid,
Thank you very much to all the informative explanation. I was introduced to trade at AVAFX, Did you ever hear AVAFX? They also offer micro account, Any ideas or issues about this broker? Thank you very much for the reply.
Toby
Hi Toby,
You are welcome. No, I have never worked with AVAFX.
i for one enjoy scalping and news trading vahid, i take my time to find a good position and utilise a good stoploss, one or 2 good scalps a day is ok for me anythang more is considered greed. your trading style is so good keep up the good work.
Hi Vahid,
You wrote above that the currency market is unpredictable duringthe news release time. Why not use the same news period from before (1 month or 3 month back), and compare the forecast and actual figures and see what happened to a corresponding currency at that time? For instance when the Official interest rate of RBA (Reserve bank of Australia) goes up , the AUD/USD plummets heavily.
What do you think mate? You ever tried such aproach?
Good web site by the way, keep up with the good work.
Spets.
Hi Spetsnaz,
It is a little risky to trade right when the news is released. We trade the news in a different way. We use bigger time frames and we wait for the trade setup based on the technical analysis which is agreeable with the fundamentals.