If only Forex News Trading didn’t exist, and weren’t there to screw up our awesome technical trades.
But they do, and we need to plan accordingly.
As always, you can catch the video here, or simply continue on.
Why Avoid?
Because we have no control over the outcomes, how the masses are going to react, and how the Big Banks are going to react.
Financial news likes to try and make predictions, but they’re typically horrible.
They’re guessing, and we could just just sit here and guess too and have just as good of a shot at getting it right.
Forex is the beautiful game.
Unlike the majority of markets, we can eliminate things we have little to no control over.
Let the others play casino games. We win by choosing not to play.
We have no control where this ball ends up.
Sure, other traders are no different than casino players. They’ll tell all about when they won, and how you should play too.
I live within 30 miles of 100 casinos. I hear it all the time.
But at the end of the day, they’re in the negative big time. They all are.
I beat all of them, simply by not playing.
How To Trade Dumb
During major elections, whether they be for a major office, or a vote to stay or leave the EU, these are obvious times to not trade any currencies at all.
Just don’t.
Big Banks have the green light to jerk price all over the place during these times, knocking out your orders, stop losses, and hope.
And if you let them, they will.
Absolute murder zone for your account. Absolute dumbest time to trade.
“It’s election time!”
And Did You Know?
We love the Euro Zone, we really do.
But damned if it doesn’t like to play games with us sometimes.
Whenever you have uncertainty regarding whether a good-sized nation is going to possibly, leave the EU, it’s best to stop trading that currency.
Years ago, when Greece was going to leave, it was the EUR.
Right now, with the Brexit deal still looming, it’s the GBP. (EUR is actually fine until election days)
When these prolonged periods of uncertainty are happening, take these currencies out of your trading, until an agreement is reached.
Why?
Because every time there is a rumor of anything regarding a stay or leave (and rumors are not scheduled), Banks again have the green light to make that currency’s price go bananas.
You don’t want to be in the market, with that particular currency, when this happens.
So be a grown-up and take one of the 8 majors out of your trading for a month or two. You’ll be fine.
Scheduled Forex News
Thankfully in our market, most news events that affect price are scheduled, and easy to see coming.
I use the Forex Factory calendar as my main source of this.
I put my setting on all currencies, and to only show red and orange events.
I almost never worry about the orange, and only certain red events matter to me as well.
More on this in a minute.
My backup calendar is from Daily FX, and I rarely use it or even bother tweaking it. I just use it if my main one is down or is weirdly not showing an event like it should.
I check my calendar before I open may charts.
And if there is a major news event scheduled in the next 24 hours, I will avoid trading the currency it affects.
There is no way I’m going to let a news event I cannot control dictate the success or failure of my trade.
Putting In The Research
If not all major events are worth avoiding, which ones are?
I knew most of them, but I didn’t know all of them. So I dug.
Me, putting in work.
Let’s break this down currency by currency so you’ll always have an easy reference to look at.
I went to NewsImpact.com, and signed up for their $20/month package. This allows you to go years back and look at historical data in terms of how majorly they impacted the corresponding currency.
Really cool and really comprehensive, recommended for the uber-nerds.
Let’s go!
USD
Interest Rates
Non Farm Payrolls
CPI
When Jay Powell makes a FOMC speech
EUR
Interest Rates
When Mario Draghi makes a speech
GBP
Interest Rates (MPC votes as well)
GDP
CAD
Interest Rates
Employment
CPI
Retail Sales
AUD
Interest Rates
Employment
*Chinese news, at the time of posting, no longer has a major impact on the AUD most of the time.
NZD
Interest Rate (No impact since May 2017, but you still must respect)
GDP
GDT
Employment
JPY
Interest Rate
CHF
Libor Rate
I monitored the size of the spikes as they pertained to the ATR of the currencies vs the USD. For the USD, I used the EUR/USD.
What If You’re Already Trading That Currency?
You need to plan.
If you’re losing the trade.
Just exit. Do not run the risk of making it worse. It’s not worth it.
Remember too, during these spikes, many brokers like to widen their spreads, making the risk of your stop loss getting hit go even higher.
If the amount of pips you are up is < ATR
It doesn’t matter if you’ve taken profit yet or not. If the amount of pips you’re at RIGHT NOW is lower than the ATR of the currency pair you’re trading.
You exit.
Even if your stop loss is at breakeven, remember, the chances of that sucker getting hit is really big due to spikes and spreads widening.
Every so often, price can be so severe, slippage occurs and price goes beyond your stop loss without triggering it.
I know the upside is exciting, but exiting now at profit puts the math in your favor long-term.
If you’re already winning big
If the amount of pips you are up is > the ATR of the currency pair right now….
Just carry on like you would.
You either have a stop loss at your break-even point, or you have a trailing stop on — great! This will be enough.
Conclusion
Avoiding news adds lots of pips onto your bottom line.
You won’t notice it right away.
But it’s like I always preach, we win by eliminates senseless losses that we didn’t have to take. And this is a BIG thing to make sure you avoid.
I hope this blog and video saves you tons of pips in your trading career.
But that part is ultimately up to you, isn’t it?
— VP