What to do around Major Economic News?
Generally, price action traders believe that price discounts every factor that may influence a security's price.
But you should Not Ignore Major (High Impact) Economic News Announcements like:
Interest Rate decisions, Non-Farm Payroll, FOMC, Crude Oil inventories, and so on...
REASON:
- If you did take a trade in line with the result of the economic news release you stand to make a lot more money in a very short period of time.
- But if your trade direction was against the news, you can walk away with all your profits wiped out or even a loss, and the loss can be huge because markets can move so fast during that period that your stop loss might not get triggered; so you end up losing much more of what you intended to lose.
WHAT TO DO?
As per my trading plan, I check the news calendar every Monday, and before the news release, I follow the table as per the picture above.
Always think in terms of Risk vs Reward.
For example:
I always target (+2R) double the stop loss size and let's say my trade is floating around +1.8R
If the news was in my favor, I would earn that extra +0.2R
But if the news was against my trade direction, I would lose the 1.8R
In this particular example
Risk (losing 1.8R) >>> Reward (earning extra 0.2R)
so I close the trade before the news release and book that +1.8R
All Strategies Are Good; If Managed Properly!
~Rich
But you should Not Ignore Major (High Impact) Economic News Announcements like:
Interest Rate decisions, Non-Farm Payroll, FOMC, Crude Oil inventories, and so on...
REASON:
- If you did take a trade in line with the result of the economic news release you stand to make a lot more money in a very short period of time.
- But if your trade direction was against the news, you can walk away with all your profits wiped out or even a loss, and the loss can be huge because markets can move so fast during that period that your stop loss might not get triggered; so you end up losing much more of what you intended to lose.
WHAT TO DO?
As per my trading plan, I check the news calendar every Monday, and before the news release, I follow the table as per the picture above.
Always think in terms of Risk vs Reward.
For example:
I always target (+2R) double the stop loss size and let's say my trade is floating around +1.8R
If the news was in my favor, I would earn that extra +0.2R
But if the news was against my trade direction, I would lose the 1.8R
In this particular example
Risk (losing 1.8R) >>> Reward (earning extra 0.2R)
so I close the trade before the news release and book that +1.8R
All Strategies Are Good; If Managed Properly!
~Rich
Trading Made Simple; and Rule-Based
RichTL.com
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RichTL.com
instagram.com/richthesignalyst
Telegram
t.me/thesignalyst
Best CFD broker
cutt.ly/TickmillReal
Best Crypto Exchange
coincall.com/r/thesignalyst
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