Trading the news in the forex can be fun, exhilarating, and very, very profitable – if you know what you are doing. If you do not know what you are doing, you can lose a lot of money really quick. I want you to make money when trading the news, and so I want to show you a very good strategy that works well.
When major news happens
Major news or economic reports are released several times a week by various countries. Many of the reports come out during the first week of the month. The Bank of Australia reports, the Bank of England reports, and non-farm payrolls are all released the first week of the month.
So you definitely want to be paying attention to news releases during the first week. Of course, news is released at other times as well. To find out what is released and when, simply search for 'forex news calendar'.
When to trade the news
Here's the thing – you do not want to trade the news immediately before or after the release. More than likely you will get killed.
Because there is not a lot of volume in the market after news releases.
Now this may sound strange because you definitely see a lot of movement in the market after news releases.
But the reason you see all of that movement is because the big forex players are not trading, so the small forex traders move the market very quickly.
That is why if you try to enter the market after a news release, your order may get filled 20-30 pips away. It is because there is no volume, and there is no one out there to take the other side of your trade.
How to trade the news
When there is not a whole lot of volume, the market ranges. It takes volume to push through support and resistance, and if there is no volume, support and resistance hold.
So good way to trade the news is to find two major news releases about 24 – 48 hours apart. Then apply your favorite range trading strategy and pick up a ton of pips trading the market back and forth.
If done properly, you can easily make 100 pips with very little risk.