The Quickest Legal Way to Make Money
You can make so much money in the forex by trading news. I mean, where else could you make 10%, 20%, 50% of your money in just a few minutes? Trading forex news releases can be everything you imagine in trading - fun, exciting, heart-pounding, instant, daring, and profitable - if you know how to do it right. So how do you trade the news profitably? Let's look at some basic strategies.
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1. Don't trade before or immediately after news releases
You might get lucky, but more than likely you will just lose money. The spreads are too high, the liquidity is too low, and the volatility is too unpredictable.
2. Straddle strategy
Before the news is released, find major support and resistance lines. Place an entry order above the resistance line and an entry order below the support line. Make these orders dependent on one another so that when one of them is filled, the other is automatically cancelled (your broker can tell you how this is done). What you are doing here is using the news as a catalyst to get the market beyond the major support and resistance lines. You are assuming that once those critical levels are broken, the market will continue in that direction and make you money.
3. Reversal strategy
It is not unusual for the market to take off in one direction after a news release only to retrace and move strongly the opposite way. This is because the first initial trading flurry is caused by small traders who just reacted to the news. The big forex players actually read the news release (imagine that!) and form long-term biases based on the content. Then they enter the market with their millions of dollars and move the market in the opposite direction. So be patient. Let the initial outburst run its course and look for signs that the big players are entering and reversing the market. Once you see this, jump in.
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