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How to Trade Forex around Major News Releases
As the saying goes, you miss 100% of the shots you don't take.
Any experienced forex trader will tell you that trading currencies when a major economic report gets released can be treacherous. Usually, right around the moment of the release the market gets very nervous and choppy, volatility picks up strongly, and you can easily get "shaken out" of your trading position -- whether you are long or short.
Even if you manage to stay in, once the news comes out, prices can gallop in one direction so fast -- sometimes opposite the direction you expected -- that it's hard to get a handle on what's going on.
Probably the most infamous of all scheduled news releases -- infamous for its treachery, that is -- are the U.S. interest rate announcements by the Federal Reserve Bank. Several times a year, at 2:15 PM on a Wednesday, the Federal Open Market Committee (FOMC) makes a statement about the state of the U.S. economy and announces its decision on interest rates: raise them, lower them, or keep them steady.
Forex markets get very quiet on the morning of the FOMC announcements. And sometimes, they stay quiet even after the news gets released. But that's not what happened on the day of the previous release on March 18.
That day, the news sent the euro-dollar exchange rate (EUR/USD) to the moon: from near $1.30 on March 18 to above $1.37 the next day. The incredible 700-pip rally was so fast and strong, it even sparked rumors of the U.S. dollar's imminent demise.
Clearly, that was also a tremendous opportunity for those forex traders who were correctly positioned before that news came out. But if you ask experienced guys what's the best way to trade on such days, many will tell you -- don't even try. It's just too scary; take a vacation. And usually, that's really good advice: It's just too dangerous of a shot.
But then... as the saying goes, you miss 100% of the shots you don't take, right?
So... what then? Well, there is a trick to trading around major economic news releases: Try and use Elliott wave analysis to tell ahead of time whether prices have a bullish or a bearish bias. Then, if you position yourself in the direction of that bias, your chances of success rise tremendously.
The next FOMC meeting is scheduled in two weeks. At 2:15 PM on Wednesday, April 29, the forex markets may get rocked again -- depending on their "mood"; I'm sure Elliott Wave International's Currency Specialty Service will have a lot to say about that before the meeting. Whether or not you choose to be trading that day, I believe you can only benefit from taking advantage of the free Elliott wave learning opportunity I'm writing to tell you about.
At this 40-50 minute webinar, Jim Martens, Currency Specialty Service editor, will walk you through his actual intraday analysis of the market action after a recent FOMC announcement. You will learn how the structure of Elliott wave patterns before a major event can help you identify the market's likely direction afterwards.
To take advantage of this special free opportunity, subscribe to Currency Specialty Service or Global Market Perspective now. You will find access instructions one day before the webinar takes place on the Subscribers page of elliottwave.com and inside the Service. (As a Currency Specialty Service subscriber, you also get instant access to Jim Martens' latest 49-minute webinar, "Anatomy of an Elliott Wave Trade - Part 1," which is posted inside the Service now.)