The News volatility straddle forex trading strategy (also well-known as Forex news trading strategy) was created specifically to exchange crucial forex releases with minimal risk as possible. It can be utilized only for important foreign exchange news reports such as non farms payrolls, interest rate decisions or US GDP. Nevertheless most currency pairs respond to such announcements, the USD-supported currency pairs display the most excellent outcome due to low gap and utmost liquidity.
- Circumvents gap widening and decline problems.
- Fundamental component for a trade.
- Simple establishment.
- High prosperity rate.
- Crucial announcements events are rather rare.
- A broker with low gaps and high affection exchange execution is needed.
How to Exchange
- Select a crucial news announcement that has a high influence on foreign exchange pairs.
- For EUR/USD, I advise US interest rate decisions, US GDP, Euro zone interest rate decisions, US PCE reports and US nonfarm payrolls.
- Begin purchase and auction positions one minute earlier the scheduled news announcement. It will assist you to safeguard the exchange from decline and widening gaps.
- Establish stop-loss for the two positions to 10-20 approved pips depending on the predicted announcements volatility.
- Establish stop-loss for the two positions to 5*SL. It will sustain the essential risk-to-reward turnover rate.
- The announcements volatility will most presumably trigger one exchange’s stop-loss and the other’s take-gain.
- Move the remaining position’s stop-loss to break-even once the paper stretches earliest stop-loss distance.
- Terminate any positions left 1hr after the announcement.
If your broker utilizes “first in, first out” (FIFO) execution ideal, it is still likely to exchange announcements with this strategy. Assign pending orders with entry points at the levels you could establish the stop-loss of the earliest purchase/auction positions. When one pending order is set off, the other one should be call off. This strategy adjustment is necessary to utilize in Meta Trader 5. Sadly, it endures from added exposure to widening gaps and decline.
The instance depicts an exchange on USD/CAD @ M30 diagram throughout a joint release of the US and Canadian jobless numerical values for October at 13:30 UTC on 6th November 2015:
- The entries are illustrated with red and blue arrows showing right.
- The blue one is purchase; the red one is auction.
- The earliest stop-loss levels are the red lines higher up and beneath the entries.
- The pink line is the purchase exchange’s stop-loss subsequently it was carried to breakeven.
- The take-gain levels are green lines higher up and beneath the entries.
- The auction was ended by stop-loss throughout the first second after announcement. The exit is highlighted with the red arrow denoting left.
- The purchase was ended by the time-out an hour after the announcements. It declined to stretch the aim level but still acquired adequate gain to overspread the loss on purchase and auction an important reward. The exit is demonstrated with the blue arrow showing left.
Utilize this strategy at your own risk. WindsorForex.com cannot be responsible for any losses associated with using any strategy presented on the site. It’s not recommended to use this strategy on the real account without testing it on demo first.
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