Futures Traders: Do you trade the news?
You guys. For all our futures traders out there, you know! Certain federal government news events or announcements have incredible power over market movement. At the moment when certain pieces of information are announced, the stock market as a whole can have significant price action movements that are out of proportion compared to a standard volatility. Some of the big news events that we are very cognizant of are FOMC meetings with federal funds rates, monthly unemployment rate, and CPI data, to name the big 3.
There are ways to study and learn an edge with these moves, but there is tremendous risk with it. Some traders, Becky among them, have a particular interest in understanding better how news might move the market AND in what ways we can best capitalize on this volatility and move with it. In this episode, we review how to know in advance when these announcements or events will take place and what you need to understand to protect your trading game.
https://www.forexfactory.com/calendar
Such an important resource to check when making your daily trade plan. Look at this calendar the night before or at least 1.5 hours prior to NY session opening each morning so you are prepared for any potential volatile movements during your trade time. Red folder events will have the largest impact to price movement.
In the episode, we show viewers how to navigate the Forex Factory calendar, a brief overview of what to be cognizant of, and a real example of price movement during an event. While we have traded news events some and spectated much, you do certainly have to be quite cautious with it. Many of the “red folder” events from the US will cause a strong candle and follow up momentum when they announce and if you are in the market looking to scalp at that time, you better hold on! These can rapidly take out stop losses or thrust an unprotected trade into a significant profit or loss in seconds.
The mamas briefly review some ways in which they have traded through these events and their experiences with it. As day traders, we are often in and out of trades in minutes. So, this is something we must be aware of and purposeful with. If this risk is something you are prepared to fully accept, there is opportunity in it. But we certainly recommend not trading it live until you have put in the hours and reps of studying how your instrument has moved in the past with these catalysts and have a strong plan for how to manage it.
Trading is a magical world full of unique and interesting opportunities that we want to understand as much of as possible. And each experience we have with Miss Market teaches and grows our skill set and strategy bank. So, learn with us! If you have any questions or comments, please let us know! We’d love to hear from you all.