{"id":3342,"date":"2016-05-15T12:47:51","date_gmt":"2016-05-15T17:47:51","guid":{"rendered":"https:\/\/www.optimusfutures.com\/tradeblog\/?p=3342"},"modified":"2016-05-15T12:47:51","modified_gmt":"2016-05-15T17:47:51","slug":"trade-major-news-releases-professionally","status":"publish","type":"post","link":"https:\/\/optimusfutures.com\/blog\/trade-major-news-releases-professionally\/","title":{"rendered":"How to Trade the Major News Releases Professionally"},"content":{"rendered":"

Trading news, economic reports and other releases are important influencing factors in the financial markets and, thus, also impact your trading. There isn\u2019t a day without a report coming out and\/or someone with an important announcement that can potentially affect the markets. These events can often cause volatility and abrupt changes in momentum and trend direction. In this article, we show you how news impact the financial markets, what this means for your own trading and provide you with some trading tips around such events.<\/p>\n

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Before the news \u2013 market reactions and trading tips<\/strong><\/h2>\n

Price behavior before an important news event usually follows very similar patterns. First, volatility and momentum are often flat and price enters a sideways range. This happens when traders and investors are unsure about the numbers behind upcoming report. Thus, no new positions are taken and price just moves sideways.<\/p>\n

Sometimes, you can see sudden volatility spikes \u2013 when trading activity is low, relatively small orders can have a big impact on price movements. Thus, when you see that your market is entering a sideways market, it\u2019s usually a good idea not to enter any new trades to avoid getting trapped during those sudden spikes.<\/p>\n

If you are in a trade and an important event is coming up, there are usually a few options: first, if it\u2019s a high impact event (speeches, meetings, GDP, interest rate decisions or NFP-Non Farm Payroll), it\u2019s usually a good idea to take profits on the trade completely. Or, you can move your stop loss to protect your position \u2013 keep in mind that sometimes, stops may not work during high volatility times because there could be gaps in price movements. \u00a0Finally, you can take partial profits on your trade and secure some wins and then wait it out with the rest.<\/p>\n


\n\"Trading<\/strong><\/p>\n

Charts Courtesy of TradingView<\/a><\/p>\n

Start thinking outside the box and follow expectations <\/strong><\/h2>\n

When it comes to interpreting and understanding news releases, many traders make the mistake of just looking at the released number, see if it\u2019s higher or lower and then enter a trade. This is wrong and traders who follow such an approach will often experience losses without really understanding why. \u00a0The markets are not “logical” in that sense.<\/p>\n

For most news releases, you usually get an expected number beforehand \u2013 those are experts\u2019 estimates and they are available to everyone. Thus, such numbers are often already priced in going into a news release. Therefore, it\u2019s much more important to evaluate how the actual releases compares to the expectations than just looking at the gain\/loss.<\/p>\n

When you are following a news release, always look for the following:<\/p>\n