There are two main news trading methods!
-First method "TRADE NEWS" is trading on the news at the exact moment when news are released. That kind of news traders are using trading software.
The essence is to enter into position before others and that is why they are using news trading software. News are published in numbers. When you watch economic calendar you can see expectations numbers. News traders puts parameters in trading software. And in the moment when news is released software decides about taking a trigger.
Example:
If news provider publishes the number which is in the average area then they will stay a side from trading. But if number would be under the average area then software would trigger SELL order. And if published number would be in the area above the average then software would trigger BUY order.
For this kind of trading it is necessary to have high volatility. So news traders are picking up only the news with high impact on the market. They like to trade news like this:
• Nonfarm Employment Change
• Trade Balance, Import Prices m/m
• Producer Price Index m/m, PPI excl. Food and Energy m/m
• Durable Goods Orders
• Gross Domestic Product q/q (p), GDP Deflator q/q (p)
• Nonfarm Productivity q/q
• Retail Sales m/m, Retail Sales excl. Autos m/m
• FOMC Interest Rate Statement
-Second method is a manual news trading method. They are using the same high impact on the market news
but they need to wait for market to calm down for 15 to 20 minutes after news is released. When spread
comes back to normal. Then they search for support and resistance on 1min chart.
Then they make classical break trough setup with fixed stop lose order round 20 to 25 pips and turn on their trailing stop for profit taking managment (take as much as you can). Setups are made for both sides. So, if price comes up and breaks resistance for 3 pips, buy order will be triggered with fixed stop lose, for example 25 pips. If price comes back and hits the stop order, there still be pending sell setup. Sell trigger would be 3 pips under support line with fixed stop lose order, for example 25 pips with trailing stop.
Guidelines:
When trailing stop moves stop order to break even point, then they remove (manually) the opposite trading setup order.
If price makes large move (for example 67 pips) before timing (15 to 20 min after news release), then they will not take the trade. If spread is still wide open, they will not take the trade also.
