The high impact news trading strategy involves taking advantage of upcoming high impact news. Below is a sample news calendar extract from fxautomated.com website.
Our main interest would be only the high impact news. In the above image this would be the ones with a red dot. In the image, the time is in gmt so you have to know your gmt offset or if possible, you can change the calendar to use your local time.
We can see on 13 April for example, there is the JOLTS news at 17:00 and it’s marked as high impact affecting USD. What you do is you wait until 5-10 minutes before the news then we enter trades as shown in the image below.
If the yellow vertical line is the oncoming news time and the yellow x is the current price and time, we’ll set a buy stop order 25pips above the current pips with a tp of 50 pips then we also set a sell stop 25 pips below the current price with a tp of 50 pips. The stop loss of both stop orders will be the current price as illustrated. So basically we’ll be looking for a 75 pip move in whichever direction it will shoot from which we’ll bag 50 pips of profit.
If you look at the small blue arrow, its a rough example for if the market shot up, opened the buy stop and hit the tp level. Once a tp is hit, you must remember to delete the other order. Points to note:
- This strategy is best used in volatile pairs like CHF(usdchf, eurchf etc). You can use up to 25% margin e.g. for a 400 usd account, you can use 0.1 lots for the stop orders.
- It is also best to start with one pair e.g. USDCAD until you understand the strategy better in which case you will only need to look for high impact news affecting the usd or cad.
- As for the take profit, its not a must you wait for it to be hit. Once you find the market shot up, and you have 25-40 pips for example, you can close the trade manually too.
- If 15 minutes after the news no trade opened, then delete both orders.
- Don’t set the orders too soon before the news or after a big move has already occurred. It is best to set about 5-10 minutes before.