News Economic Announcements

You will see listed the upcoming news reports for each currency pair with the date and time.

We only want to focus on reports for the USD or GBP, not because the other don’t work but I have not tested them as of yet.

These are the main reports I trade:

• 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

You will see all these reports every month except for the FOMC which is less often. It is important that you make notes for the upcoming month with exact times each report will be released. You will be preparing to set orders not long afterwards. For the purpose of this example I am going to use the GBP Trade Balance report which is a fairly large impact report and released at 9.30am GMT. The most common way to trade the news is to wait for the report to hit and open a trade in the direction the currency pair moves. This does not work consistently and is very dangerous. Brokers widen there spreads as a news report is about to hit because there is very little liquidity in the market, sometimes spreads can get as high as 25 pips! For this reason you can not trade this way you will get bad fills and lots of annoying losses. This system works by using the momentum after the news once the market has regained liquidity and spreads have returned to normal. You will need to be watching the GBP/USD with a 15 minute chart. We will wait for the report to hit then you will see the market acting wildly as people all over the world are trying to take orders. Usually after 10 minutes or so the market has calmed down and the currency starts its move in the desired direction depending on the news.

15 minutes after the report has been released the current candle will close and we are ready to make our trades. Set two orders one sell order 2 pips below the candle and one buy order 2 pips above the candle. Each trade should be set with a 20 pip stop + spread and have a 20 pip trailing stop in place. Once this is done you can sit back and relax. See the picture below for the example of the GBP Trade Balance report.

As you can see the sell order was triggered almost as soon as it was set and the currency shot off in the desired direction. The 20 pip trailing stop moved the position to break even and continued to move down in 20 pip increments. The trade closed with 31 pips profit once the trailing stop was hit.

As soon as your position is at break even you must remove the other order! If the first sell order we took here had not made it to break even and had been stopped out for a loss of 20 pips we would leave the second order in place as my testing shows that more often than not this reversal trade will be profitable. I wanted to show you this example of a recent trade because it was not a huge win. I don’t want to over exaggerate the trades. Yes I do have trades that run into the 100's of pips but not all of them will be fantastically profitable. What is important to understand is that OVERALL the system will produce profits monthly. There are a couple of important rules that you must follow in order for this system to even more profitable for you. Do not take any trades if the currency pair has already moved 70 pips after the report was released. This does not happen very often but when it does its best to stay out. Always check your brokers spread before making a trade, be sure it has returned back to normal, if it has not then don't trade.

System Rules

Let's run through the simple rules just to make sure you understand then I will show you my actual results from 1 years trading.

1. Check the upcoming news reports and plan the times you will be trading for the USD and GBP.

2. On a USD?GBP 15 minute chart be prepared to set your orders once the first 15 minute candle of the news has closed.

3. If the currency pair has moved more than 70 pips before you place the orders DO NOT TRADE!

4. If your broker spreads have still not returned to normal for some reason after the 15 minutes DO NOT TRADE!

5. Set your orders 2 pips above/below the 15 min candle both with 20 pip trailing stops.

6. Once one of the positions is at break even from the trailing stop remove the other pending position.

7. If one of the trades results in being stopped out leave the other pending order to be filled in the opposite direction.

8. Once a trade is open do not touch it, let the trailing stop take you out of the market.

9. Keep records of every report you trade with notes, this will help you greatly in the future.