Trading during news is exciting because prices are fast, but it requires speed, high mental discipline, and a deep understanding of risk. Many retail traders (retail investors) lose not because their analysis is wrong, but because they are not prepared to face the market "game" when volatility is at its peak.
If you are the type who likes to watch news, here are 4 tips and 3 profit strategies that you can use:
Four Must-Keep Tips in Mind!
Before you dream of making double profits, the most important thing is to protect your hard-earned capital from being burned.
1. Be Prepared for 'Slippage' & 'Wide Spread'
When big data is released, liquidity in the market will disappear for a moment because big sharks withdraw their orders. As a result:
Wide Spread: The gap between the Bid and Ask prices can be 10 times larger than usual!
Slippage: Your Stop Loss (SL) or Pending Order may not be executed at the price you set, but instead it will match the next price available in the market (usually a worse price).
2. You must reduce the Lot Size
If your daily lot size is usually an elephant (for example 1.00 lot), please reduce it to an ant lot (0.10 or 0.20 lot) during the news. High market volatility (can move 100 pips in 5 seconds) means that even a small lot is enough to make the same ringgit profit, but the risk of loss is much more manageable.
3. Make sure the Margin is Thick Enough
Make sure your account has a strong Free Margin. Two-way price movements (whipsaw) when the news comes out can Margin Call (MC) or Stop Out your account in an instant if you are the type who likes to go crazy over leveraging.
4. Never ‘Chase’ Prices (No FOMO!)
If you missed the initial price spike, don’t be too quick to press the Buy button at the top or Sell at the bottom. Chasing prices that are currently rising will usually end with you ‘floating’ in a big loss when the price makes a retracement.
Three Strategies for Making Profits During News Like a Pro
If your account is ready and your mind is ready, here are three technical strategies that are often used by professional traders:
STRATEGY A: Straddling Technique (Using Pending Orders)
With this strategy, we don’t have to worry about guessing the market direction, instead we let the market choose the direction itself.
How to Use: 2 to 5 minutes before the news comes out, place two pending orders: Buy Stop (a few pips above the current price) and Sell Stop (a few pips below the current price).
Target: When the price is accelerating, one of the orders will be triggered. Your job is to delete the other order as quickly as possible. Don’t forget to set a Take Profit (TP) because the price can turn around quickly.
STRATEGY B: Waiting for Retracement Technique (Waiting for a U-Turn)
This is the safest technique for those of you who don't want to be hit by a whipsaw in the first minute.
How to Use: Sit on the sidelines and let the market go 'crazy' for the first 5 to 10 minutes. Pay attention to where the price starts to weaken, make a rejection, and look for new support or resistance zones on a small timeframe (M1 or M5).
Target: Enter the market (entry) only when the price makes a correction (pullback/retracement) to an important structural area (such as the Supply/Demand zone or Fibonacci level). This technique gives a much better Risk to Reward Ratio!
STRATEGY C: Continuity Technique (Follow the Clean Sweep Trend)
This strategy is used if the data results are 'one voice' and very clear (for example: all US data comes out in deep green or red simultaneously).
How to Use: When data gives an absolute one-way signal, the market trend will usually last a long time (several hours or even days).
Target: You can trade trend following after the first 15-minute (M15) or 30-minute (M30) candlestick closes solidly. This is a safe way to avoid being affected by price manipulation at the beginning of the news.
Golden Conclusion for Traders:
Smart traders are not those who always make the biggest profits during the news, but those who know when to relax and sit on the sidelines to save capital. If you are not good at controlling your emotions and the platform is also a bit of a mess, being an observer is the most profitable action!
Which type of trader are you? Do you like to layer during the news or trade after the market calms down?
