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Catching the New Spike
Catching the New Spike - text
In this tutorial you will learn how to possibly catch a news spike retracement or reversal.
This is the easiest news trading strategies to understand and to execute.
What is the set-up?
The set-up is a 50 point or more directional price move in 30 minutes or less.What is the entry?
When you see a 50 point or more directional price move within 30 minutes, check around for news to verify that the price move is in fact news related.
If the spike is news related open a one minute chart and add a one minute 60 period simple moving average. You would add this to a 1 minute chart
When the price goes back through the 60sma by a single point that is your entry price.
What is the stop loss?
The stop loss should be placed just beyond the extreme price reached during the spike.
The initial take profit is a 1 to 1 risk reward.
The GBPUSD pair spiked 50 pips higher in less than 5 minutes when bullish GBP news released.
At that point (after 5 minutes) the 1 minute 60 period simple moving average is added to the chart and a possible sell trade can be entered when the GBPUSD price crosses back below the 1 minute 60sma by a single point.
The sell price was 1.5140 and the stop loss (5 points above the high of the news spike) was 1.5170.
The 1 to 1 risk reward take profit was 1.5110.
So what have you learned
Trading a reversal or retracement after the news is one of the easiest to understand and execute
If you see a 50 point directional move in 30 minutes or less and confirm it is news related add a 60 sma on a 1 minute chart.
If the price goes back through the SMA Enter your trade
The stop loss should be placed just beyond the extreme price reached during the spike with a 1 to 1 risk reward ratio
That this strategy can also be used for unscheduled news