Trading on the news is one of the most popular trading strategy. It allows the traders catch a strong trend in the very beginning of its foundation and make high profits. Though the principle of this strategy may seem very simple we would like to suggest you a couple of basic rules that will guarantee every Singapore trader a more secure trading:
Don’t risk much of your money. You should always do a good money management when trading Forex, but when trading on the news, the money management factor is the most important. If usually you are trading with 1/10 of your balance, so on news trading you should change it to 1/15 or more.
Don’t open a trading position before the news announcement. The early opened position has a big risk for losses. Though you can easily find out the expected news, you cannot know for sure if these expectations are going to be true. Thus opening a trading position before the news, looks more like gambling than trading. It is better to wait before the news will be announced and you will be able to predict the direction of the market.
Open your trading positions in a right way. You need to be carful when opening a trading position on the news announcement. Follow the following tips to avoid the mistakes:
Prepare yourself 15 minutes before the news announcement. Basing on the current price you can place two pending orders: one for buy and one for sale. Thus you will be ready for any scenario of the events. It is very important not to set the orders too close to the current price. Because waiting for the news announcement the price may jump to different directions. Your orders must be placed in more than 20 pips from the current price. In order to secure your trading, we recommend you to place the stop loss orders as well in each direction.
Don’t worry if after the news announcement the market doesn’t move. It happens in Forex trading and there is nothing wrong with that. The main thing is not to cancel your plans. After some fluctuations, market will choose a direction. Once it takes place you will activate one of your orders for opening a trading position.
Trading on the news strategy is not new. It was used for many years and is effective today. Feel free to use it if you like it, this strategy is time-proved.