I would like to share with you a way that I trade the News.
This trade can be done in a relatively short period of time, around 5-10 minutes
- At the beginning of each day, check out, filter
off those “High” on importance Economic News release at http://www.dukascopy.com/swiss/english/marketwatch/calendars/eccalendar/
and take down the timings.
- 5 minutes prior to these data release, load
respective 5 min charts. The example below that I am using is 1st
May’s USD ISM Manufacturing news release at 14:00, therefore I had EURUSD chart
- On the 13:55 time 5-minute bar, place 2 limit
stop orders, a buy and a sell. (A stop order is an order that becomes
executable once a set price has been reached and is then filled at the current
market price. A limit stop order is one that is at a certain price or better. –
Investopedia). The buy order will be 1 pip higher than the 13:55 bar high. Sell
order will be 1 pip lower than 13:55 bar high. The reason for this is to
capture any big movement for the currency when the news is announced.
- Place your stop-loss and target profit levels. a. For your buy order, stop-loss
would be 1 pip below 13:55 bar low, target profit can be any of the
following: 0.5 / 1 / 2 times of risk or nearby price resistance (even
better if you put in multiple trades for different target profit levels). b. For the sell order, stop-loss would be 1
pip above 13:55 bar high. Target profit would be the same suggestions for
- Wait for the currency price to move and hit any
of the orders. Do not remove the other order yet, reason being the price
might swing the other way.
- Once the price moves in your favor and hit your
1st target profit (assuming that you have more than 1 target profit
level), move your stop-loss to breakeven price.
- End the trade at close of news announcement 5-minute
bar. For this example, end at 14:00
5-minute bar close.
- Remove any remaining orders that are not
Note: Prior to step 7, regarding the closing off the trade, you
may feel that the price may go even higher or lower after reading the news
release. You may, at your own discretion, decide when to close the trade. Step
8 is a must regardless of whether you are closing off the open trade. I had written
another article that focus mainly on managing trades when they are opened, and
what price levels of stop-loss and profit taking a trader can look at. Do feel
free to use the profit taking suggestions there:
Happy trading, cheers!