The Straddle trade step by step

The straddle trade step by step

1. We identify a day in which a major news announcement is expected – –one which is likely to move a specific currency.

2. We identify the time of the expected news release.

3. We observe the market activity as the date and time approach.

(We are looking for indications that the market is anticipating a serious move.

This would be indicated by the prices moving within a tight range for at least

5 – – 6 hours prior to the expected news release.)

4. We take note of the upper and lower bands of the range and establish resistance and support price levels.

5. We enter buy and sell orders 15 – – 20 is PIPs away, on either side of the resistance and support levels, thereby “ “ straddling” ” the market.

6. We enter stop loss orders for each of our opening orders to ensure proper equity management. Stop Loss orders should be no more than 5% of your equity on a trade, i.e. 25 PIPs.

7. We wait for the news release to move the market to our order price.

Once the market trades at our price, our order will be filled.

8. We now have to cancel the opening and stop loss orders that are no longer relevant and monitorour active trade.

9. We may now begin to move our stop loss order on the active trade in order to lock in profits (“ “ trail our stop” ”) – – though not too closely lest the market take us out on a t retracement wave.

10. When we reach our limit order, predetermined profit level or we notice the trend has broken, its time to take profits and close the trade. Remember to cancel the open stop loss order if it doesn’ ’t

automatically cancel.

The Straddle trade step by step