Trading news is exhilarating. There are two schools: those who think it is too risky to trade the news and wait for the sky to fall on their heads when news of the highest importance comes out, and those who rush to trade in priority at these times when volatility explodes. You will understand, we am not for either of the two approaches and we think that the best is to trade the news sparingly.
Here you will find a guide explaining how to trade the news in order to maximize your earnings and minimize the risk. Attention, it is all the same a strategy which can make you gain or lose very quickly since the volatility is very high, to thus reserve to the experienced traders and to the demo accounts! From Xtrade Australia you can have the best choices now.
What you need to know before trading the news
First thing to take into account: whether before, after or during the announcement of the news, the volatility on the pairs concerned will increase.
How long before / after? It all depends on the importance of the news, but you can find it in any economic calendar. Let’s say that about 15 minutes before and after, it may move strongly. In the case of a speech, for example, you have to be careful: the movements will not necessarily be important before, but throughout the speech, the slightest statement or the slightest wrong word can increase volatility considerably.
Do not try to predict the direction of price development
It may sound silly, but you can never know in what direction the prices will evolve. It depends on so many parameters that there is no point in guessing. How then do we trade the news without knowing the meaning? We program orders. So, whether prices move up or down, as long as the volatility is high enough, we are sure that our orders are triggered. Too easy? No. Because the risk is to see prices evolve, touch your order and. leave in the opposite direction. It is quite common, in these times the market does not know what it wants.