One of the most asked questions on news trading is determining your entry. Let’s face it, spike trading is dead, with brokers playing tricks on you, widening the spread, delaying execution, nasty slippage, you name it…
Unless you still deal with a broker from the dark ages of online trading, chances are you won’t find one that lets you trade the news profitably, at least not for spike news trading…
And for those still exploiting such brokers, you might risk account closure, or your broker may outright take your money away based on exploiting the market.
For those who don’t know what News Spike Trading is, it is a style of news trading in which a trader executes his/her order immediately after a high-impact news release to take a position seconds before his/her broker updates the price feed.
Since significant news usually causes the market to a spike in either direction, and this method aims to capture that spike, thus it is called news spike trading. This is, in essence, exploiting your brokers as they have to suffer financial loss due to latency in their price feed and actual market reaction.
I think is essential to understand this fact before we look at what I’m about to share. Here is an analogy: Imagine one day you got a credit card in your mail, which has no limit on the card. It’s a mistake, but you decided to use it anyways; after all, it’s free money, so you thought… until one day, someone catches on and cancels your card… This is exactly what is happening with news spike trading.
Remember, your brokers are necessary evils in your trading. They provide a service, and they should get compensated, and when the market is moving in sharply due to news releases, they have the right to protect their interests; all you need to know are the rules of the game and play by the rules…
That’s why what I am sharing with you will make so much sense to you if you trade the news; it’s called the Double Fibonacci Method.
I use this method daily to calculate my entry after the news, and I have seen firsthand how accurate this method is. You can use this with any high-impact news and pinpoint your entry after release, preventing you from jumping in too late or too early.
So, without further ado, here it is: