Trading within these news windows can be seen as gambling by some, but I wholeheartedly agree only if there is no plan in place and it's not being observed. It's crucial to remember that in a single day, we can lose more than we can make. Therefore, doing our due diligence, following a well-thought-out plan, and staying ready are imperative.
I want to dive into the topic of trading during Red Folder releases, those high-impact news events that often bring volatility to the markets. There are many different approaches when it comes to handling these events, and while some may advise avoiding them altogether, I take a different approach. I believe that with proper planning and risk management, trading during these periods can present unique opportunities. So, let's discuss how to navigate these waters successfully.
First things first, I have a full worksheet printed on my desk that serves as my ticket to the market. Before the week starts, I diligently note down all the Red Folder news releases for major currency pairs. This allows me to have a clear overview of the upcoming events and plan my trading windows accordingly. The goal is to avoid holding positions during the release itself, as the volatility can be unpredictable.
To stay on top of the news, I rely on both MyFXBook (Medium & High Impact) and Forex Factory (Major Red Only). These platforms provide me with the necessary information to plan my trades effectively. It's essential to know if your trading account has any news restrictions, as some account types may have limitations on trade execution during the release window.
When trading news events, I have a few key parameters that guide my approach. First, I focus on timing and technical analysis. The price must either be starting from or heading towards a predetermined level before I consider entering a trade. I prefer to wait until after the data release to place any entries, as short-term price action during news events is often driven by psychological factors.
I also ration out my risk and avoid loading up on positions immediately. Instead, I manage my risk carefully and enter positions gradually as the market unfolds. This approach helps mitigate potential losses and allows me to capture big wins when the market aligns with my strategy.
It's important to note that I don't examine the released data in great detail, as short-term price action can often be unpredictable. Instead, I focus on the overall market sentiment and look for opportunities that arise after the initial volatility subsides. During events like FOMC and NFP (Every 1st Friday), I typically wait for 45 minutes to 1 hour before considering any trades, unless a clear scalping opportunity presents itself. For my personal favorite Red Folder release, the UOM Consumer sentiment (Every 3rd Friday), and other important events I give the market a few minutes to digest the information before entering trades.
Always prioritize risk management and stick to your trading strategy. By remaining disciplined and prepared, you can navigate the volatility of Red Folder releases and capitalize on the unique opportunities they present. Remember, knowledge is power, and with the right approach, these events can become a valuable part of your trading arsenal.
Stay diligent, stay focused, and trade smart!
On most of the Red folder News day, my opinion was that markets can be choppy and irrational leading to the news release so I avoid trading on those particular days. But with these news perspective I think I would also now wait for the volatility to settle after news event to see whether there other trade opportunities in the market.