In today forex faq, we have a question from one of my students regarding new release.
Below is the question
I just wanted to ask you whether you will exit your trade before a major news release to avoid the hugh spike in prices due to the reaction of the news.
If you have been following my blog, you will know that I am a full technical trader. I trade 100% based on technical analysis and do not read any news at all.
Therefore I do not have the habit of exiting my position before any news release as I do not have the habit to check the date of major news release. The reason why I do not trade the news is because there is no way you can read the sentiment of the market after a news release.
You may think that this news is going to push up the market but you will be surprised that the market moves the opposite way instead. I do not deny the fact that I do have trades that are stopped out due to news but at most one or two per month. There are times where the news actually helped me to hit my target even faster.
One typical example is a trade that was taken yesterday on the EURUSD. I entered a BUY trade and the price is actually moving in my favour about 16 pips profit. Suddenly the price moves rapidly down and unfortunately it hits my stop loss and then started to move back up to hit my target profit.
If not for the news, I will have bagged home the profits. However this does not affects me much as this is something you have to accept in trading. As long as you have a strategy that works meaning that you have testing it for years. This small setback will not affect the overall performance much.
As long as I stick to my strategies, I will still be profitable at the end of every month. One thing I learn in trading is to relax, do not tense yourself too much. Just enter a trade and let the trade run, do not worry about any news as you will not be able to tell which way the market is going to move due to the news.
This is my little opinion on this question and for those of you who has something to share, do feel free to give your comments below.