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MMTS 2
This is the second momentum (news time) trading strategy.
Trading the “news” is one of the techniques that can generate profits very fast but only if it the trader understands what is going on with a particular announcement.
Each time there is a news release we need to know the following:
Which country is releasing that news announcement?
Are there any other announcements at the same time?
What kind of a news it is?
Are there any possible revisions?
Did you select the correct currency pair to trade?
There are usually 5-10 different news releases per day, however, we should only trade the ones that can produce a significant movement.
Major Fundaments to Watch for:
Interest Rate Decision
Non Farm Payroll
Trade Balance
Retail Sales
GDP
ISM Manufacturing
CPI
Each of these releases usually produces runs that range in 30-100 pips.
To learn about the fundamentals and what exactly is expected from the news please visit www.forexfactory.com.
Go to the calendar section and click on the news. A full explanation will appear. Read it, learn it, and make notes. In the future you will be more prepared for a trade that deals with a fundamental release that you are familiar with.
Trading the News Strategy:
For all major news that comes out as a single release we can use a straddle strategy that will enable us to have a buy and a sell order one minute before the news. To do it, note the price one minute before the news and add 10 pips to it for a long/buy entry, subtract 10 pips from it for a sell/short entry. Only one position should be hit if news is straight forward. If both positions get hit, trade needs to be dealt with using the “hedge strategy” – covered under “hedging” page xx of this seminar.
For currency pairs that move with less volatility you can enter those trades with +5 /-5 pips using the price that we have one minute before the news.
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