With Forex there are so many ways to trade and to make money. There are also as many ways to lose money. It is often hard figuring out a profitable way to trade the markets. In this article, we will suggest a few idea on how to trade news releases. News trading is a popular way to trade the markets and it is a quick way to trade the markets. Most people get it wrong and that is the source of them losing money. Our goal with this article is to give you some ideas that will help you preserve your account when you trade news.
First things first, Forex trading is very risky and most people lose money. News trading is one of the most risky ways to trade. Why is it so risky? It is risky because you are depending on a news release to guess at the direction of the market. You aren’t counting on any other forms of confluence to make a high probability trade. I don’t say this to discourage you but to force the issue of money management and discipline when you trade the news. Some of the things that make news trading risky also is why I personally like it. I like that it is simple, that results are typically quick and the choice that I have to make it binary.
Step 1 is to only trade around 1% of your account on any trade you make. News releases are risky and low probability but speculating is a fun way to trade the market. Your goal should be to hit a single and not to hit a home-run. This can mean that you add to your trade throughout the day and size into a trade to earn more money once things work in your favor.
Another technique is to place limit orders above and below various ranges of support and resistance so that you can choose a direction once the news has moved the market, this allows you an entry in the right direction.
Realize that news trading is more like paddling out in the ocean and waiting for a big wave similar to what a surfer does. So know that you are going to have more failures than successes but if you use proper money management, this will not matter one bit because when you have a winner, you get to ride it out and add money to it as you go (the whole idea of pricing in, adding on and compounding a trade.)
The truth is that self-discipline and psychology matter more than anything in this form of trading. Your success will be based on how well you stick to your money management principals and how well you deal with all the failures you will have trading this type of strategy. Don’t let this discourage you because you can do this, just follow the tips that are in this article and build your mind and emotions to handle this type of trading.