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With a possible gain of 321 pips forecasted at our “take profit level” at the previous swing low, risking 98 pips (difference between our entry and protective stop), we had a reward/risk profile of 3.2:1. Regardless of any key news announcements, this meant that if the trade was a winner at hit target, we stood to make 3.2%. If the market proved the trade wrong and it turned into a loss then the most would have lost is 1% of our trading account’s value.

On the 6th March, the trade was at a slight gain and the world’s most widely anticipated economic number was due – the nonfarm payroll statistic. Nonfarm payroll days are considered by many as being too volatile and wild to trade with profitable consistency. But do you think it affected our trading plan for the NZDUSD sell trade?

Of course not! We remained safe in the knowledge that the technical argument behind the trade was sound and accepted the fact that the number would do one of two things:

It would either turn the market against our sell position or help to perpetuate its winning outcome at a faster rate. If we risked, say, $100 on the trade and the trade lost then we would have forfeited no more than $100 – the worst possible outcome. However, had the data release agreed with our sell bias and forced the market downwards then the best possible outcome would have been a $320 gain!

 

Learn to Trade, News, Putting, Odds, Your Favour, forex, forex training, coach NZDUSD

Conclusion

Attempting to guess what the news is when trading set-ups with low reward potential is a mugs game. A large part of successful news trading is to only trade set-ups with high reward potential so that if you are right, you win big and only lose small if the market proves you wrong.

Nobody can consistently predict what the news will be – some analysts will get it right some of the time but nobody gets it right the whole time.

Do you have to know anything about the news in order to do this? The irony is that the less you know about the news and its effects, the better! Through simply choosing high reward/risk set-ups, placing your orders and walking away to let the market decide, you really can pave the way to transforming your trading into a peaceful and relaxing hobby.

Rob Colville
Trainer and Founder of
The Lazy Trader

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