86# Major News Trading System
In Forex, as in other financial markets, there are always numerous news and events all the time. Besides, as Forex markets are open 24 hours a day, more news come out
from all the countries around the globe. Some of these news and events cause more volatility than others. When an important economic event is released, we
expect great volatility, and with that we expect a good opportunity to make a good profit.
The news/events that we are going to monitor more closely for this strategy are the ones that have more implicit volatility.
The Rules:
The news and events that cause major volatility in the Forex markets are the payrolls and the FED interest rate decision announcement. These are the only events from which you can expect huge volatility almost all the time. You will need to enter a buy or short sell order one hour before these major events because Forex brokers do not assure you that the orders can be filled. If you try to insert an order only a few minutes before the news come out, you may not be able to enter it at the price you want. In this strategy, you will place 2 different orders. The buy entry order will be placed 10 pips above the high of the day and the short sell order will be entered 10 pips below the low of the day. One thing that has a major importance for this strategy is the stop loss order. You must place a stop loss order of 50 pips in each one of the orders. As there is abnormal activity, if the currency pair doesn’t go the way you want, this is the highest risk you are taking, while your profits can
often be more than 100 pips. This is a terrific risk-reward. After entering the trade, you will use the Awesome indicator to tell you when to exit the trade. You will exit the trade if your stop loss is reached, or if the Awesome indicator gives you an exit signal.
As this strategy is basically based on high volatility periods, if after 2 minutes of the news are released you don’t see any abnormal volatility, cancel the entry orders at once. Do
not waste time. These news and events cause such movement that sometimes prices start to move rapidly some seconds or minutes before the due time for the event
release.
For this strategy, you should use 15 minutes charts.
Trade #1 – Long Position:
Entry: Buy EUR/USD at 1.2825
Stop Loss: 1.2775
Exit: 1.2887
Profit: 62 pips
According to this strategy, we will place two different
orders. The buy order will be placed 10 pips above the high
of the day – at 1.2825 –, and the short sell order will be
entered 10 pips below the low of the day. We will also enter
a stop loss order of 50 pips on both orders. If your broker
doesn’t allow you to place an order during news releases,
you must insert your order 30 to 60 minutes before the
news release.
After entering on one trade, in this case the long position,
you will automatically remove the other order that was not
filled.
You must follow the Awesome indicator closely because it
will tell you the best time to exit the trade. You will close
your position at 1.2887, when the Awesome indicator is
giving a downtick (it turned red).
In less than 2 hours, you just booked a profit of 62 pips…
This is what abnormal activity is all about.
Trade #2 – Long Position:
Entry: Buy GBP/USD at 1.8940
Stop Loss: 1.8890
Exit: 1.9088
Profit: 148 pips
In order to follow this strategy, you need to place two
different entry orders – one for long and another one for
short. The buy order is going to be placed 10 pips above
the high of the day, at 1.8940. The short sell order will be
entered 10 pips below the low of the day. Depending on the
broker you are using, these orders must be entered up to 1
hour before the news released. Do not forget to put a stop
loss order of 50 pips, again, for the two orders.
If your order is not filled 2 minutes after the news release,
remove your orders immediately. Sometimes, the
movement that we were expecting doesn’t happen. So, it is
better to look for another trade elsewhere.
Once you enter in one of the two orders, remove the other
one.
After entering on the long side, you should monitor the
Awesome indicator which will tell you when to exit the
trade. When the indicator turns red – or gives a downtick –,
it is time to exit the trade. In this particular case, you
should sell at 1.9088, with 148 pips profit.
Trade #3 – Long Position:
Entry: Buy GBP/USD at 1.8436
Stop Loss: 1.8386
Exit: 1.8515
Profit: 79 pips
The horizontal line in this GBP/USD 15 minutes chart
represents the price at which we are going to place our buy
order (10 pips above the high of the day). We will also
enter a short sell order 10 pips below the low of the day.
Do not forget to place a 50 pips stop loss for both entry
orders. You may think this stop is too large but in extreme
volatility days, you should use this kind of stop. You can
adapt a different stop loss if you prefer to.
After entering the trade, you should pay attention to the
Awesome indicator. If you check the chart, you see that
this indicator turns red at 1.8515. This is where you exit
your position, with 79 pips profit.
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