With this news trading strategy, you wait until the news is announced and see what the figures are. You let the initial market reaction take its course but you are looking for a signal to enter when the marketreverses temporarily allowing you to get a good entry.
For example, the Reserve bank of Australia announces an interest rate increase from 3 to 3.25 %
The reaction to this type of news will see the Australian dollar increasing in hundreds of pips in minutes.
But with this system, you are not jumping in the initial rush. You also do not trade the breakouts. You just wait for the price to settle down a bit and that’s when you enter.
Where to get the forex news and dates they are scheduled to be released? Over at forexfactory.
Head over to forexfactory.com and see what time the news is scheduled to be released.
A few seconds after the news is released, refresh the forexfactory page so that you will see the figure(s) of the news.
if the news is good for the base currency, price will shoot up, if its bad, price will fall down.
switch to the 1 minute timeframe (if you are using that) and watch the candlesticks highs or lows.
For A Buy setup, if the news is good and currency shoots up, you will see the 1 minute candlesticks making new highs and higher low. Then price will start to reverse and what you will see is that the highs will be lower and the lows will be lower than the previous candlesticks.
You buy signal will be when a candlestick breaks the highs of the previous candlestick. You immediately buy at market price.
Set your stop loss at 15 pips and set your take profit target at 45 pips (3 times what your risked).
In the above chart example, notice that you would have made a buy trade 7 minutes later or should I say 7 candlesticks later?
WHAT THE BUY SETUP LOOKS LIKE IN A 15 MINUTE CHART
The chart below is the same setup above but viewed in the 15min timeframe.
WHAT ARE THE RULES OF THE SELL SETUP
For sell setup, its the exact opposite. Here’s an example of a sell setup so you get the idea of what I’m talking about here:
If you use the 5 minute or the 15 minute timeframe to trade the news this way, you can use buy stop or sell stop pending order.