Trading News and Spreads

Trading news is a hot topic right now. Whenever there is a red folder at www.forexfactory.com, most retail traders will look for an opportunity to take a risk to make some sort of money. Now this is not necessarily a bad thing, but its not a good thing either. See, high news events like interest rates, Unemployment, CPI etc, they all bring very high volume into the market. Most of the times they are very volatile and its hard to predict it ca move the price. Now at times we can speculate, but truth be told, due to the volatile nature of these events, its pretty hard do to so.

So lets say you are a brave cowboy and you want to trade news. Now a brave cowboy that you are, you will try to do a market order; which is one of the ways you will trade news, other than placing pending orders. Now you got your cowboy hat on, and you have a market position placed. As the countdown starts for the magical news event, you get tensed and get ready to close the position in a HUGE profit, or maybe attempt to close it as it reaches your stoploss (I HOPE you have one). So the news comes, and all of a sudden you see that price goes the opposite way and your position is gone.. “WHAT THE FUCK” is what comes out of your mouth since you are a brave cowboy so you can use that language. As you look at your history, you find that your stoploss got slipped, by 10 pips if you are LUCKY, but you find out that it got slipped 30 fucking pips !! Now you are LIVID and angry ! You tell your group how the broker is trying to fuck you. But let me tell you what REALLY happens.

The prices you see on the chart; I will try to dumb it down for everyone in a way everyone can understand it. The prices you see on the chart, they are being given to the broker by the market, and in turn the broker presents them to you on the chart as they happen. So now lets say that you had a buy position at 110.200 and your stoploss was 110.100. So when news came, it came SOOO fast, and SOOO viciously, that the price the broker got from the market was 110.000 !!! Which means that the system never even received 110.100 in order to execute your stoploss, THEN you have to take into account the fucking spread that WIDENS by god knows how many pips. So since the broker never even say 110.100, technically it wasnt possible to execute your stoploss. Now the same thing happens to pending orders.

Lets say you had buy stops at 110.200, and the news comes, its so volatile and filled with volume that your order gets activated at 110.350 !! 15 pips ABOVE where you actuallly had it !WHAT THE FUCK right ?? Yeah, same thing happened here. The news was just too intense that the broker never even got the 110.200 to execute your order, but instead it got activated at the NEXT best price that it received; you also have to now account for the wide spreads too.
So at the end of the day. Please don’t trade news, especially if you are new. Trading the news makes NO sense at all. At The Forex Family and Fx Masterclass, we make sure noone takes unnecessary risks with the news. The only reason is that we all have profitable strategies, and we want to really exploit them. So if your strategy has a high winning rate, why trade the news ? Lets not be brave cowboys, and lets all become Safe Sally; because Safe Sally, picks her trades wisely, trades 1 to 2 times a day, does not worry about news, and is over all profitable

MORE FROME FX MASTERCLASS?

Trading Plan

Why Candles Matter

Market Sessions

Trading News and Spreads

Support System