Attacking News Events explained by professional Forex trading experts the “Attacking News Events” FX trading team.
Attacking News Events?
Trading news announcements like Non-Farm Payrolls can be dangerous, and to anyone going into a news release without fear of how badly an account can be ravaged by volatility should probably avoid doing so, and instead – wait for quieter markets.
But to the trader that always protects their downside, adheres to strong money management, and protects their account by avoiding the number one mistake Forex Traders make – News announcements can offer compelling opportunities for a lot of movement in a very short period of time. Price Action, as discussed in The Forex Trader’s Guide to Price Action can assist greatly in the initiation of trades.
This movement and volatility can bring a significant amount of pips to a trader’s account.
This clues the trader in to the fact that something is going on at this price. Unfortunately it won’t tell us what exactly, and whether or not we should buy or sell – but it does tell us that this is an important price in the currency pair.
The reasons for the bounce could be endless. Perhaps there is a large corporation looking to exchange currency setting a line in the sand with which they want to buy. Or perhaps this price is a strong level of support (much like Parity on USDCAD or AUDUSD).
Whatever the reason may be, we can use the information that we do know to strategize a manner of entry into the trade; but first we have to decide which direction we want to make a play.
Double Spike Breakout
The Double Spike Breakout looks to play a continuation move in the currency pair, expecting the support (or resistance) that has reversed price in the past to become broken on another attempt. The picture below will illustrate in more detail:
With the Double-Spike Breakout, it’s important to remember that, like any breakout, price can easily reverse against us and move for an extended amount of time.
Given that price has bounced twice in the past, it is perfectly reasonable to expect that price may break support enough to enter our position, and then reverse against us. So prudent rules of money management when trading breakouts apply; and risk-reward ratios may be more favorable at 2:1 or greater (looking for 2 dollars of profit (or more) for every 1 dollar risked).
The Double-Spike Fade is the opposite of the earlier strategy in the fact that it looks for a reversal after seeing the second bounce off of support (or resistance). However, since the trader doesn’t have the luxury of substantiated support and/or resistance – a different modal of entry is necessary.
Attacking News Events Conclusion
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