Forex Strategy «Trade breakthroughs on the news»: it is no secret that the impact of important news on the forex market is sometimes very large, on this basis, the majority of forex traders generally are always trying to be at the monitor screens to their door, hoping for at least some earnings.
But oddly enough, you can not do hardly any who (for many reasons: «no price», «no connection» with the trading terminal, «trade context is busy» or a pending order triggered, but the market price, which differs by 30 times -50 points from the applications — as a result of the transaction is concluded or at a low total Hai news movement — and this implies that at times a very big loss for trading in such a way traders), based on this — only a few traders ever had still make a profit on news (by accident, or go on a very large bag of tricks and gimmicks to make a profit. But these tricks in the end anyway and suppresses DC (and sometimes not even pay these earnings, as all such earnings the company is extremely not beneficial for several reasons and mostly about such situations warn the trader when signing the contract …)).
The important news is forex are mainly the following economic developments:
1) Changes in rates of central banks: FOMC, ECB, BoE, BoJ, etc.
3) Announcement of Fed meeting minutes
Other economic events, too, sometimes move the forex market, but they generally have a much smaller influence on him, so there is less likelihood that the price the market will go far.
During these events on the forex, it is best to use a strategy of «breakthrough». In this strategy, forex, we consider the method of the breakout, which was designed to give traders the opportunity to profit by trading on the news when the currency pair is «dramatically» is moving in one direction, due to market reaction to economic news.
Figure 1 — The EURUSD currency
In Figure 1, you can watch a 5-minute chart of the currency pair EURUSD. For this strategy, forex, we need only a 5-minute price chart.
As well as two sets of Bollinger Bands (Bollinger Bands):
- Bollinger Bands with a deviation of — 2.5
- Bollinger Bands with a deviation of — 1
Look at the schedule before leaving the important news, the price on the chart as it strays into almost a straight line, but after the release of important news begins its movement. Candle rising sharply in the same direction and the next 3 candles on the chart make lower lows.
After 15 minutes after leaving the important news, if the candle closes lower minimums for each 5-minute candle, when every other Japanese candle closes outside the shadow of the previous candle, we will enter into transactions in the forward direction or a breakthrough.
In Figure 1, the first horizontal line represents our entry into the market at a price of 1.5522. Our first goal is always the profit is 30 points, while the initial stop and put on 30 points. We had a deal with 2 lots (if your deposit to Forex not as great, respectively can trade 0.2 lots, lots, or 0.02 micro-FX). After the first goal will be reached, the stop-loss move to «zero», ie breakeven point. And now we come to the aid of the band indicator Bollinger.
The space between 2 1 and 2.5 standard deviations indicator Bollinger bands will be used as a level to warrant an exception. If Bollinger is still directed towards the implementation of a breakthrough, but the price is within them, we still remain in the short trading positions. Exit the trade position is determined by the behavior of price in relation to the indicator Bollinger bands and performed upon the occurrence of any of these two conditions:
1) if 60% of the body of a Japanese candle falls within the bands with a standard deviation of an indicator Bollinger (purple line on the graph) or
2) an entire candle is within or between the lines with a standard deviation of an indicator Bollinger
In any of these cases, the transaction should be closed. In our case, the 2-meter lot was received 90 points and 30 points of profit on the 1 st lot — as a result within one hour of trade we have earned 120 points profit!
Figure 2 — The currency pair AUDUSD
In Figure 2 we can see how this method is applied to a 5-minute price chart of currency pairs AUDUSD. The price is very well kept by sharp fluctuations before leaving the important news. After the announcement of the news, rushes down the candle, the second trading candle closes below the shadow of the first candle, and the third candle makes it all much lower minimum. Entering the market is carried out at the opening of the next Japanese candles at a price of 0.9547. Our initial goal of 30 points was quickly reached on the price level of 0.9517. The second objective of profit fixed once the price returns to the region between the bands with a standard deviation of an indicator Bollinger gives us another 26 pips. The total profit for this trade deal totaled 56 points in less than an hour of trading.
Figure 3 — Currency pair USDJPY
In chart 3, you can see another example on the currency pair USDJPY. Look — a pair of very rapidly increased by implementing the closure of the 2 nd candles outside the shadow of a second candle, and the third candlestick showed a much higher maximum. Entrance into the market occurred at a price of 105.02. Profit of 30 points between 1 and Lot was obtained after 10 minutes, and then move slightly attenuated, but after about 45 minutes, we close another 32 points with a total profit of 62 points in just one trading hour.
Conclusion for Strategy of Forex «Trading breakouts on the news:
Be sure to wait until they close down all three 5-minute candles, and make sure that the 2-I need a candle closes outside the minimum or maximum 1-second commercial candles, depending on the implementation of the direction of a breakthrough in the market. And make sure to move stop loss to break-even point, ie a «zero» after the first goal will be achieved by profit (30 points) and then just watch the price movement outside the space between the strips with a standard deviation of 1 indicator Bollinger.