HOW TO TRADE THE NEWS!

 Trading forex news releases requires a tremendous amount of composure, preparation and a well-defined strategy. Without these qualities, traders can easily get swept up in all the excitement of a fast-moving market to their detriment. This article provides useful strategies on how to trade forex news during a major news release.


There are two common strategies for trading forex at the news release.

Initial Spike Fade strategy

News Straddle strategy


Initial Spike Fade Strategy:

This strategy looks to capitalize on an overreaction in the market over the short term by fading the initial move. This strategy suits reversal traders, scalpers and day traders due to fast moving and erratic pricing that often follows a major news release.


News Straddle Strategy:

The news straddle strategy is perfect for traders expecting a huge surge in volatility but are unsure of the direction. This strategy lends its name from a typical straddle strategy in the world of options trading as it uses the same core strategy – to capitalize on an increase in volatility when direction is uncertain.

TRADING THE NEWS DURING THE RELEASE: CONCLUSION

Trading forex news at the news release has the potential to overwhelm traders with increased volatility in a short period of time. However, through the adoption of a solid strategy, traders can approach these volatile periods with greater confidence and mitigate risk of a runaway market through the use of guaranteed stops (where available).

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