Forex News Trading Strategy Trading System

Forex News Trading Strategy Trading System

Today we are going to discussed about Forex News Trading Strategy Trading System. Its very important for Forex trader.

Step 1: Go to investing.com .
Step 2: Now, look at the Calendar for News releases that affect the Forex market. The ones particularly to look for are the following news announcements:

1. Unemployment Reports (Non-Farm Payroll)

Non-Farm Employment Change is the actual change in the number of employed people in USA, during the previous month, including the governmental employments, but excluding the farming industry. That is why it is a strong and important news and it shows a very strong impact on the currency market.Non-Farm Employment Change” is important for Forex traders, because it makes the market move, and so, forex traders can take the advantage of the movement and make some money

2. Interest Rates

Interest rates are one of the most important fundamental factors that influence the value of a currency.  The higher the interest rate, the more desirable the currency.. The higher interest rates that can be earned tend to attract foreign investment, increasing the demand for and value of the home country’s currency. Conversely, lower interest rates tend to be unattractive for foreign investment and decrease thecurrency’s relative value.

3. Consumer Price Index (CPI)

The Consumer Price Index or CPI is a fundamental economic indicator that has become one of the most closely watched inflation measures used by forex traders. Furthermore, both the influential data’s initial release and its subsequent revisions can often result in significant swings in the Forex market. The level of the CPI is commonly used by economists and fundamental traders to assess the level of inflation prevailing in a country’s economy that relates to the cost of goods and services to a typical consumer.

Basically, if the CPI or Core CPI number for a country comes out above the market’s expectations, then that tends to increase the value of that country’s currency relative to other currencies.On the other hand, if the CPI or Core CPI comes out below the market’s expectations, then that will tend to reduce the value of that country’s currency relative to others.

4. Inflation Reports

The Inflation has long been a serious enemy to economic growth and the world’s central banks constantly try to keep inflation in check by adjusting monetary policy. Inflation can influence currency exchange rates considerably, and the perception of inflationary trends makes up one of the basic items affecting central bank monetary policy.Because inflation affects all levels of society and the totality of consumers in an economy, it makes up one of the most important economic indicators to central banks and Forex traders alike.

5. Gross Domestic Product (GDP)

The gross domestic product (GDP) is one of the primary macroeconomic indicators used to assess the condition of a country’s economy. It represents the total monetary value of all goods and services produced over a specific time period – the size of the economy.GDP or Gross Domestic Product represents the total monetary value of goods and services produced over a specified period of time in a country. In other words, GDP measures the overall productivity of a country’s economy and is used to measure the level of growth and the economy’s health in general.

6. M2 (Money Supply)

When it comes to fundamental analysis of a currency of a particular nation, one of the most influential factors to mark trading currency pairs, is the monetary policy course, adopted by central banks.Monetary policy stands for the whole process, by which the central bank (monetary authority) controls the money supply, the availability of money and the cost of money (also known as borrowing costs or interest rates) in order to attain its objectives, usually oriented towards economic growth and overall economic stability.

7. Treasury Budget

Data released by the U.S. Treasury on a monthly basis that accounts for the surpluses or deficits of the federal government. Treasury budget data tracks the changes in monthly balances as an indicator of budget trends and the direction of fiscal policy. The annual Treasury budget process starts in January and is usually proposed in April as the President’s Budget.

8. Producer Price Index (PPI)

The Producer Price Index (PPI) measures the average change in the price of a basket of representative goods and services sold by manufacturers and producers in the wholesale market (this is why it was known in the U.S. as the Wholesale Price Index up to 1978).It is one of the oldest continuous statistics published by the Bureau of Labor Statistics; it is released monthly. There is also core PPI which excluded high volatility items, such as energy. In contrast to the CPI, which measures price changes from the consumers’ perspective, the PPI measures them from the seller’s perspective.

9. Retail Sales

Retail sales data is compiled differently according to each country and their bureau of statistics, some countries have private companies for some data and government offices for others. We will analyze the US retail sales data which is compiled & released by the US Census Bureau. This data measures total retail spending in stores & receipts across the nation and its monthly rates of change expressed as a percentage. This data covers sales for durable and non-durable goods ranging from food to autos at a retail level.

10. International Trade

Unemployment Reports are released on the first Friday of every month at 8:30 am EST for the prior month (this is a big one you should always attempt to trade!), and every Thursday at 8:30 am EST they release a weekly adjustment.

NAPM (National Association of Purchasing Managers) released 10:00 am EST on the first business day of the month for the prior month. Retail Sales released 8:30 am EST around the 13th of the month for one- month prior.

Particular Currency Pair

Only Trade the following currency pairs as they appear at this time to move more than the others: EUR/USD, GBP/USD, USD/CHF. Do not attempt with real money (just demo) to trade other currency types with this strategy. Notice the above information. Removed all nations that this system does not work with. Now that you know at what time you need to be at your computer ready to make the trade, we need to get ready 5-10 minutes before the announcement to trade.

Download  and start trading using channel buy sel indicator Download channel buy sell

Place pending orders

When there is an important news on the way, as we don’t know what direction the forex market will choose, we should place pending orders.
Setup:
1. Open an Economic Calendar (Investing.com)

2. Look for the important news to be released.

3. Choose the most influential ones that are expected to shake the market well.

4. Once got news find out which currency pair is going to be affected.

5. 15 minutes before the data is released place buy/sell stop orders on both sides 15 pips away from the current price. Half an hour prior to the big news Forex market usually flats out – no significant trading is done, currency is often “stuck” in a small tight range. After studying for a while a particular currency pair and its reaction to the news, traders can predict direction of price
spikes and the length of the move in pips to set entries and profit targets more accurately.

Forex News Scalping

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.

Details

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.

Remember

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:

Find below example-

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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