Today, I will show you how to trade prior to a major news announcement. I personally don’t trade on days when there are major announcements on the USD but you could potentially trade leading up to that release.
At the NY open, the EUR (pink line) is strong and turning up while the NZD (purple line) is weak and turning down.
Since these currencies weren’t showing huge momentum, you would have placed your order 10 pips away from the market and probably would have entered at the top of the opening bar (worst case scenario).
I would close this trade out 5 minutes before the news was scheduled to be released. The reason why is it’s much too dangerous to leave an order in during that announcement. As you can see by the large price bar, the news caused price to whipsaw in a 40 pip range up and down. There is no way your stop or profit target would be honored even if you had them placed. Avoid these situations!
So, if you closed it out 5 minutes prior to the news, you would have at most a 4 pip gain and realistically when you consider the spread this probably would have been a small losing trade.
First off, get used to losing if you want to become a long term trader BUT you could have avoided this loss altogether by staying out of the market on news days.
Watch the entire video analysis below: