Forex Trading After The Announcement Of The News.
Trading on the reaction to the news is not as dangerous as the trade on forecast of the news. But it also gives a smaller potential for profit. Instead of prediction of the news, the trader simply monitors the news and opens a position only if the news diverges strongly with the forecast. Thus, such a trader cannot make a mistake, having forecasted the news incorrectly. However, this strategy also has its dangers. After the announcement of news, which was unexpected for the market, there are sharp price movements, and then slippage becomes inevitable. A trader catches the running off price – there is always the dangerous that he must buy at the top or sell at the bottom.
Presumption which underlies this policy – is continuation of price movement. The price should proceed the movement in a given direction so that a trader will be able to make a profit. Since the basic price adjustments often happen at the very moment of the announcement of news, very often only dribs and drabs are left for such a speculator. That is why the speculators trading on the reaction should remember the advice of Baron Rothschild. When he was asked how he managed to become so wealthy Rothschild replied: “Because I always derive an income quickly. Likewise, when applying such strategies, it is necessary as fast as possible to take profits. In such situations the major enemy of the trader is greed.
If trading on the prediction is too volatile, and the opportunities to trade after the announcement of news are limited, is there a better way of trading in perilous events? Yes, there is such a method. Solution is a simple combination of two techniques, which was carried out by Jessie Livermur.
Jesse Livermur is one of the greatest speculators of all time. He is known as a supporter of “projected” approach to the trade. Instead of placing the entire position immediately, Livermur first tested the market by placing small orders to check the accuracy of his analysis. If the first bargain was profitable, he increased the amount of positions, exercising pyramiding of profit.
Livermur enlarged the volume of profitable but not loss-making positions. This method is directly opposite to tactics of most traders. Scaling of the position upwards instead of scaling down – is a promising technique for management of the capital, as it allows to minimize losses and increase profits. However, the methodology of Livermur is very hard to implement in practice because it demands that the trader refuses from short-term profit for potential bigger long-term win. For the average retailer there is nothing more annoying than watching as profit turns to loss that occurs quite often when using the technique of Livermur because the price often makes a pullback in the opposite direction, nullifying all the profits. That is why many players are doing just the opposite to what experts of trading recommend: they allow losses to increase and fix their profits too quickly.
Today people are looking for additional or even primary sources of income as never. World economy is still in tough condition, and to get a well-paid job is quite hard. And forex is one of the ways to earn some money. To trade successfully one needs to know events on the market, so live forex news is of great help here. Those who don’t know where to get fx news can use the online network. Just type “forex news trading“, for example, in Google or other search engine and you will get many news sources to choose from.