The document discusses two strategies for trading news events in currencies: 1) Use a straddle to trade the initial reaction to major news releases like GDP and employment reports. Place orders above and below the pre-event range with the goal of booking profits as the volatility subsides. 2) If the initial reaction is opposite the broader trend, look for reversal signals on shorter timeframes to "fade" the move by entering positions in the direction of the broader trend. Partial profits should be booked as price moves in the trader's favor.

1. Investment Insights
Investment Insights
Trading the News
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2. Disclaimer
•
Trading carries significant risk of losses and may not be suitable for all
investors. Traders should assess these risks either themselves or in
consultation with a financial advisor before investing.
•
There is no guarantee that the trading techniques, methods and other
information in this presentation will result in profits. The content in this
presentation in only intended for educational and informational
purposes and not intended as trading recommendation.
•
The content of this presentation is subject to change without notice.
•
Stockstream Financial Advisory Services LLP or mystockstream.com
will not take any liability or accountability of losses arising from the use
of information in this presentation in any manner.
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4. Introduction
• News events provide fundamental triggers to price action.
• Examples of news events are,
o GDP reports
o Employment Reports
o Interest Rate decisions, etc
• These are marked by extreme volatility due to only buyers or sellers
in the market.
• Generally markets move in the direction of the broader trend after the
news event volatility subsides.
• Due to high volatility it is advised to trade in liquid pairs
o EUR/USD: 28% of FX Volume
o USD/JPY: 17% of FX Volume
o GBP/USD: 14% of FX Volume
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5. Trading the News: Strategies
• Due to the tendency of markets to move in the direction of broader
trend news events provide two trading opportunities.
• Trade the initial Move:
o This strategy is designed to trade the initial reaction to the
news event.
o Preferred strategy for momentum traders.
o Use a straddle to execute this strategy.
• Fade initial Move:
o If the initial reaction to the news event is opposite to the
broader direction then look to fade it.
o Use a reversal signal on shorter term charts to enter trade.
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6. Strategy 1: Straddle
• Trading strategy (Short):
o
Place One Cancels the Other
(OCO) orders above and below
the pre event range.
o
One of the entries is triggered
after news event.
o
Stop = Placed above pre news
levels.
o
Target = Book profits when
reversal signal is observed on 1
or 5 min chart. Book partial
profits when 1:1 risk reward is
achieved.
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7. Strategy 2: Reversal
• Trading strategy (Long):
o
Look for reversal on a 10-15
min chart after news release.
o
Buy once reversal signal is
confirmed.
o
Stop = Placed below post
news release lows.
o
Target = Book partial profits
when 1:1 risk reward is
achieved. Hold remaining lots
till reversal is observed on
longer term charts (1 hour).
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8. Example
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9. Questions
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• Follow and interact with StockStream Experts for answers
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10. Questions
• Visit and register at mystockstream.com
• Follow and interact with StockStream Experts for answers
•
•
•
•
StockStream Education
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