Day Trading Blog: Trading Plan: How to trade news events

Saturday, August 28, 2010

Trading Plan: How to trade news events

Being in 10-20 Min Prior to a News Event
Enter with stop order at the news release
After the event with a pullback

Entering after the breakout on a pullback sometimes does not work. Its far more profitable to have a position PRIOR to a news event with a breakeven stop, so you might get 10 points slippage but 9 out of 10 it works well.

About 90% of all explosive moves happen in direction that a small move prior to the news event did, so entering either on a small pullback on that prior move or with a stop market order will put you on the right side of the market. Since I always place a buy and a sell order at the same time either way i will have a position after an explovie move.

Its important to predefine the risk before placing a order, if the risk is too high its very likely that after the news release the price settles down and then a low risk entry in the direction of the breakout is possible.

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Trading Rules:

how to trade profitable? with KSE. knowledge, strategy, execution.
Knowledge: You need to buy low and sell high. So I wait for the price to first go to a prior support level on the daily, 4h, 1h chart.
Strategy: Timing is important so I trade when there is a good setup on the dax, s+p, nasdaq or oil market. My goal is to make few trades with high risk reward, that is archived by either holding a trade till the market closes or reaching a level that sets up a counter trade.
Execution: Usually there is only a 20 point risk involved, so I try to get into a prior support level on the 10 min chart and automatically set a stop and multiple take profit targets.
All the little details how to trade better are listed here but I like to keep it simple: just enter the market at prices with a target that it at least 3 times the initial risk.

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Trade at your own risk. The information provided here is for Education only and is of a general comment only and neither purports nor intends to be, specific trading advice. It has been prepared without regard to any particular person's investment objectives, financial situation and particular needs. Information should not be considered as an offer or enticement to buy, sell or trade. You should seek appropriate advice from your broker, or licensed investment advisor, before taking any action.

By reading this Blog, you acknowledge and accept that all trading decisions are your own sole responsibility, and I cannot be held responsible for any losses that are incurred as a result.

There is risk of loss in trading and investing. All trade decisions are your own sole responsibility.