) was developed specifically to trade important Forex news with as little risk as possible. It can be used only for influential Forex news releases such as US GDP, non-farm payrolls, or interest rate decisions. Although all currency pairs react to such news, the USD-based currency pairs show the best result due to low spread and high liquidity.
Circumvents spread widening and slippage problems.
A broker withlow spreadsand high quality trade execution is required.
Choose an important news release that has a high impact on Forex pairs.
For EUR/USD, I recommendUS GDPUS nonfarm payrollsUS interest rate decisions, Eurozone interest rate decisions, and US PCE reports.
minute before the scheduled news release. It will help you to protect the trade from slippage and widened spreads.
standard pips depending on the expected news volatility.
. It will provide the necessary risk-to-reward ratio.
The news volatility will most probably trigger one trades stop-loss and the others take-profit.
once the paper profit reaches original stop-loss distance.
If your broker uses first in, first out (FIFO) execution model, it is still possible to trade news with this strategy. Place pending orders with entry points at the levels you would set the stop-loss of the original Buy/Sell positions. When one pending order is triggered, the other one should be canceled. This strategy modification is required to use it in MetaTrader5. Unfortunately, it suffers from additional exposure to widened spreads and slippage.
The example depicts a trade on USD/CAD @ M30 chart during a joint announcement of the US and Canadian unemployment figures for October at13:30 UTConNovember 6,2015:
The entries are shown with the blue and red arrows pointing right.
line is the Buy trades stop-loss after it was moved to breakeven.
The Sell was closed by stop-loss during the first
The Buy was closed by time-out an hour after the news. It failed to reach the target level but still earned enough profit to cover the loss on Sell and produce a significant reward. The exit is marked with the
Use this strategy at your own risk. cannot be responsible for any losses associated with using any strategy presented on the site. It is not recommended to use this strategy on the live account without testing it on demo first.
Do you have any suggestions or questions regarding this strategy? You can alwaysdiscuss Forex News Trading Strategywith the fellow Forex traders on theTrading Systems and Strategies forum.
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CFDs are leveraged products and as such loses may be more than the initial invested capital. Trading in CFDs carry a high level of risk thus may not be appropriate for all investors.