Anticipating Results (Most Aggressive Strategy)
The trader has an intuitive feeling (a
hunch) for the outcome of the economic data. It is not a wise
strategy to put on a trade before an economic news announcement. But
if the trader has an informed point of view, putting on thetrade
before the news announcement is an aggressive play that can be very
profitable if correct. The key risk of being wrong and having the
price move against you is important to minimize.
Tactics for the aggressive strategy are
as follows: About 15 minutes before the economic data release,
locatethe5-minute or 15-minutec hart.Locate support and resistance
levels. Use the average true range (ATR) at the default setting of 14
periods. Place a market order in the direction you desire. Place a
stop loss order at 2 times the ATR. Should you put on a limit order?
In trading the news, the idea is to be ready for a big move But we
don’t know if a big move will come. So a small limit order
targeting 10 to 15 pips would be like eating cake with artificial
sweeteners. If you’re going to trade the news, focus on controlling
the risk. The idea is to take a ride on the bull or bear, get on
before the break of the news, and then try to stay on to get the most
out of the move. So I don’t recommend a small limit. You might want
to put on a larger limit of 75 pips.
Getting off the trade in a news event
requires a high level of skills in identifying shifts in sentiment.
Renko charts are a powerful tool for this. Remember, riding a bull or
bear represents high risk. But if you want to try it out, do it with
small lots on and test your skills.
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Riding the Bull or Bear
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