Chapter 7 – Basic Trading Methods

Fundamental Trading Methods

 

TRADE THE SPIKE

  1. We wait for the news release to come out. Based on the release number we will enter the market immediately if our expected deviation is hit.
  2. We will try to catch the initial spike move, whole or part of the move, and get out of the trade at top of the expected movement range (40-50 pips.)
  3. A stop/loss will be placed 15 pips from the pre-release price. This is the price level just before the news release. Our take profit order will be once again the top of the expected movement range.
  4. This type of trading requires a fast reaction, a good broker that allows you to trade the news and gives you a good fill with minimum slippage.

Trade Plan

TRADE THE RETRACEMENT

  • We wait for the news release to come out. Based on the release number we will determine “where” to get into the market if our expected deviation is hit.
  • We will wait for the market to retrace back within 10~15 pips of the pre-release price level. Sometimes when we have a huge deviation, we can enter the market at 20 pips from the pre-release level, but it would be based on discretion. Market will usually retrace within the first 5~30 minutes, if a retracement is to take place.
  • A stop/loss will be placed 15 pips from the entry price. Therefore, it is very important to wait for the market to come back because if we enter too soon, we might get stopped out.
  • This type of trading is much easier than trading the spike, but sometimes we might not get a retracement at all or big enough and miss this trade altogether.

 

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About Kelvin Ching

I'm a professional Forex trader and I have been trading for over 7 years. I was a series 3 broker and a registered CTA with the NFA, the main regulatory agency in the United States, and I have been involved at the highest levels in commodity trading. I also have a background in Information Technology, graphics design, and programming... I'm the co-founder of CurrencyNewsTrading.com, a site dedicated to fundamental analysis and news trading.

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