Trading On The News As One Of The Most Popular Forex Strategy.
Thousands of strategies were created since the moment when Forex trading in Singapore was invented. And every time their authors were proud to declare that a perfect Forex strategy is found. But in the end none of these systems could give a stable income for a Singapore trader. Most of the existing systems either don’t work at all or strop working after a long use. It makes sense as the Singapore Forex market is chaotic. Even an effective strategy that brings you profit now will fail later. It will have to be upgraded according to the market’s changeable conditions. But the situation is not as bad as it seems. Out of thousands of Forex strategies there are ten universal ones that won’t die even after tens and hundreds of years.
One of these techniques is the news trading strategy. In this article we will discuss this approach. It is one of the most common Forex strategy. Its basis is to execute transactions during or after the announcement of important financial events. Still the strategy is focused on the strong market movements otherwise it would not make sense. The most powerful news is the majority of political news in USA. The special attention must be paid to the news on interest rate changes as it usually causes very big rates movements.
In order to succeed trading on the news, we recommend you to follow these principal rules:
1.Don’t risk much of your investment. You have to always do a good money management and for news trading it is even more important. If usually you are trading with 1/10 of your money, so on news trading you should modify it to 1/15 or more.
2.Don’t start a trading position before the news announcement. The early placed trade has a big risk for failure. Though you can easily find out the forecast of the news, you cannot know for sure if these anticipations are going to be true. Thus opening a trading position before the news looks more like gambling than trading. So wait before the events will be announced and you will be able to predict the direction of the market.
3.Open your trades in a correct way. You have to be carful when opening a trading position on the news announcement. Follow the following recommendations to avoid the mistakes:
Prepare yourself 15 minutes before the news announcement. Using the current rate level make 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 place the orders too close to the current rate. Because before the news announcement the rate may jump to different directions. Your positions must be opened in more than 20 pips from the current price. In order to secure your trading, we suggest you to place the stop loss orders as well in each direction.