3 Main Tips To Trade Forex Systematically
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There thousands of different Forex trading strategies written since the invention of Forex trading. Their authors cried in one voice and argued that, finally, after a large amount of time they have found the truth on Forex. But in the end it was only just loud cheers, and nothing more. Coined strategies either did not work absolutely, or stopped working after prolonged use. It is understandable. The Forex market is chaotic, changeable, and nothing permanent is alien to it. Efficient strategies will fail some time or other and they will have to be upgraded. But everything is not as amiss as it seems. Of all the thousands of Forex strategies there are ten all-purpose strategies that will exist even in hundreds of years.
What are these strategies? In this article we will talk about trading on the news. This is one of the most widespread Forex strategies. Its core is to make several transactions directly during the publication of important economic news. I emphasize important news, but not every ones. The strategy is based still on the forceful market movements, or otherwise it would simply not make sense. Important news is the better part of news concerning the U.S. at 13:00 - 16:30 GMT. There may be more later news, about at 17:15 - 18:15 GMT. The news about changes of interest rates is the most interesting and popular, as they promise very big price movements.
In order to successfully trade on the news, you must follow these basic rules:
1) Do not risk a big lot! Money management has to be always observed, but speculation on the news is even better. If you are trading with 1/10 part of your deposit, then it is reasonably to knock off the risk to 1/15 or higher. Well, if you are trading with only 1% of the money, then you don't have to change anything, you will not be able to change anything, since it is already very low.
2) Do not open the position before the news! Too early opening of position threatens with losses. Yes, by virtue of some analysts, you know what you may expect from the news. It is not difficult to know about forecasts. But you are not aware of whether they will come true or not, and no one can give a guarantee to you. Therefore, opening your position before the news, you run the risk of flying blind. It will be good if you will be able to guess the direction. And if not? Unplanned losses? So before the announcement of news keep yourself in the hands and do not hurry. Surely, you can argue, they say, when it is time and the data is declared, it will be too late. That is true, but you can prepare beforehand. How to do it? Read the next item...
3) Arrange the orders correctly! To avoid any unnecessary errors described in the item 2, do the following: Before the publication of the news, about 15 minutes prepare for it. Set two orders from the current price at once: one for opening a position to buy, the other - to sell. Thus, once you reckon for 2 variants of events. The most significant thing is not to set orders too close to the present price. Before announcing the data on news, it will necessarily be small jerks in both parties. That is why, if the orders for open positions will be just 20 points from the present prices, they are simply will be caught with market fluctuations. You do not wish to open a position in the opposite direction? So you need put orders to limit losses. It is necessary to place them in two exemplars.
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