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Saturday, July 15, 2006

Forex News Trading Strategy

Forex News Trading Strategy - I haven't traded the news before, but after finding this forex news trading strategy, I may reconsider. The strategy was posted by a guy called Ricky, under the handle of NWRK. Here's the new thread for this forex news trading strategy. Rick closed the original thread and started a site of his own forex news trader. I haven't used his payed service, so I can't comment on it, I'm just testing his forex news trading strategy.

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Here are the rules for this forex news trading strategy ( this is Rick's original post):

Forex News Trading Strategy

Hello, I am new to this forum, but not to Forex. I would like to share a way of trading the news with a high rate of w/l trades. This strategy is for high volatile moves. No indicators are needed. No RSI, No MACD, no nothing! Just the pair you are interested in on a 1 minute time frame! Here is how it works! If this has been posted on this forum before, I am sorry, but I came up with this last year, and have been trading it sense.

Set-Up I trade the following news events: NFP, FOMC, Trade Balance, interest rate statements, consumer price index, and gross domestic products. These seam to move the best for this strategy.

The country, and pairs are usd, jpy, uk, BOC, E-12.
NOTE: the wicks, or shadows do not count!

How it works! You have points (A), and (B). retrace then enter.
Point (A)=open of first candle.
point (B)=the close of the candle, before the fisrt down (bear) candle. If there is 3 candles up, then a pull back (bear) candle, the close of the 3rd candle is the (B) point!
NOTE:the first candle can have both (A) and (B) points!

Entry:UP-DATE ON ENTRY PLEASE READ The first candle to close above, or below, OR BREACH point (A), or (B) is where you enter the trade. If it closes , or breaches above point (B), then you go long. If it closes below, or breaches point (A), then you go short.
NOTE:After the retracement the candle must close, or breach above, or below point (A), or (B)! do not enter until then!

EXIT:The distance between point (A), and point (B), is the minimum target you should try for!

Stop:What ever point you get in at, the other point is your stop! if you get in at point (A), then point (B) is your stop. If you get in at point (B), then point (A) is your stop. Myself, if I get in a trade other then the NFP, and I see profit at any point, I do not let it go against me. I will try for the spread, or even!

Same thing for down trend. open of first candle is point (A), price goes down, then pulls back, at that point you have point (B). Price goes up. When a candle closes on the other side of (A), or below (B), then enter the trade that way with a target of the distance between (A), and (B)!

The other news releases don't always move the market the way the NFP DOES! My target for those is 75% of the distance from point (A), to point(B). If it only moves a little and you make say 10 pips, and you exit the trade...if price goes up and closes on the other side of the other point, then enter the trade that way also, with the same target!

It is that easy! I have lost 1 trade sense I have been trading this strategy. I hope it does for you, what it has done for me! Happy trading...



Regarding the entry, Rick suggested in a later post on the SB forum thread ( I posted the link above) that after considering a breach of the candle for entry, he got back to his original idea a close of the candle - After the retracement the candle must close above, or below point (A) or (B).

That's all.

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Please visit SB forum thread to inform yourself about updates to the strategy, post questions, and share with other people that use this forex news trading strategy. Hope to see you there! Here's the link again: forex news trading strategy

Bank of Japan raises rates for the first time in six years

Bank of Japan raises rates for the first time in six years - The BOJ raised rates yesterday, the first such move in six years. The overnight call rate was raised from zero to 0.25 per cent, in line with expectations, but the discount or Lombard rate, at which the BoJ lends directly to financial institutions, was only raised by 30 basis points to 0.4 per cent, less than the forecast 40-basis point rise.

Tony Norfield, global head of FX policy at ABN Amro said: "A 50 basis point rate would have given the yen support; 40 basis points leaves it vulnerable to further weakness"

BOJ Governor Toshihiko Fukui said 3 of 9 board members advocated raising the discount rate, to 0.5 percent. They were outvoted by the majority who favored lifting it by 30 basis points to 0.4 percent, less than some analysts had forecast. Fukui told reporters after the decision the bank doesn't plan to raise rates consecutively.

Dispite the rate rises, the dovish statement contributed to wide yen selling. The yen fell against all major currencies after the news. It closed at 116.12 against the usd, gbp / jpy closed at 213.45, and eur / jpy closed at 146.87.

You can find the Bank of Japan statements here BOJ Announcement of Decisions

Thanks for reading this article. Later I will post how I traded the Bank of Japan news release.

Saturday, July 01, 2006

FOMC June Meeting Decision and Aftermath

FOMC June Meeting Decision and Aftermath - The Fed raised its fed funds rate by 25 bps to 5.25% on it's last two day meeting ending June 29. A move expected my most analysts but the surprise was the statement issued after the meeting.

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The FED maintained its description of inflation expectations as "remain contained" while the impact of resource utilization and rising energy prices to continue to only "have the potential to sustain inflation pressures".

However, the FED changed the part of the statement regarding economic growth. FOMC gave this assessment of the US economy in it's June 29 statement: indicators suggest that economic growth is moderating from its quite strong pace earlier this year, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices.

In it's May 10 Meeting, regarding economic growth the FED said: "The Committee sees growth as likely to moderate to a more sustainable pace".

Regarding future decisions, the FED said: "The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information. In any event, the Committee will respond to changes in economic prospects as needed to support the attainment of its objectives".

The FED maintained the decision will depend on the data attitude, not giving any clues about it's future moves. This should cause additional activities like we've seen in the past months, the traders interpreting every data release as more significant, and adding more weight to it, which in turn could lead to choppy trading ahead.

You can find the text of the statement here: FOMC June Meeting Statement

Still the statement is dollar negative and dovish. The FED issued a more certain note towards moderating economic activity, while making no upgrade in its inflation vigilance.

The dollar feel against all major currencies as a result of the statement. It lost 130 pips against the euro after the FOMC June Meeting Decision, and closed at 1.2666. Against the pound, the dollar lost 170 pips and closed at 1.8274.

In yesterday's trading we saw the effect of the the decision will depend on the data attitude when the dollar got hammered badly on a set of bad news. The dollar fell for a second day yesterday, losing 124 pips against the euro, and 206 pips against cable. It closed the week at 1.2791 versus the euro, and at 1.8482 against the pound.

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All questions and comments are welcomed as usual. Thanks for reading FOMC June Meeting Decision and Aftermath analysis.