After Spike Trade Plans for Week 28, Jul 5 – Jul 11 2020

Peter O

Special Consultant to the FPA
Messages
4,737

How does after spike forex news trading work?

Forex News Trading can be extremely profitable if you have an understanding of fundamental analysis and have good trade plans to benefit from price action as they unfold after an economic release. Do not worry, Forex Peace Army analyst will help you to identify high-probability tradable economic news reports and advise on the trading strategy. You can find more details at Introduction to Afterspike Trading using Diamonds Trading Signals.
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Hi Fellow Traders,

On this week (July 5 - July 11) we have 2 tradable releases for Diamonds Trading Signals:


⋯⋯⋯⋯⋯ Monday, July 6 ⋯⋯⋯⋯⋯

USANon-Manufacturing PMI10:00am NY time


⋯⋯⋯⋯⋯ Tuesday, July 7 ⋯⋯⋯⋯⋯

AustraliaInterest Rate12:30am NY time



Cheers,
Peter
 

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Diamonds Trading Signals Trade Plan

USA Non-Manufacturing PMI ⋯ 10:00am NY time (Monday, July 6)

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Traded currency pairUSDJPY
Initial spike duration limit30 seconds
Initial spike price action threshold12 pips
Triggering retracement percentage40 %
Retracement duration limit90 seconds
Maximum trade hold time after release15 minutes
Stop loss10 pips
Take profit10 pips
Maximum spread2 pips


  1. Set up single click execution on your broker platform, and if possible, pre-determine default stop/loss and default take/profit to 10 pips, so that when you click to execute your order, your platform will automatically set your stop/loss and take/profit at 10 pips from your entry price. Do not try this with brokers that don’t offer single click execution.

    If your platform does not allow to pre-determine default stop/loss and take/profit, then after entering the trade, simply set the stop/loss and take/profit points manually.

  2. Pull up either tick, 1-second, 3-second, or 5-second chart, and at 09:59:45am, so 15 seconds before the announcement, start paying very close attention to the price action of USDJPY on your chart.

  3. If between 10:00:00am and 10:00:30am, so during the first 30 seconds after the report, you see USDJPY move up or down by 12 pips or more, then enter in the direction of the initial spike at the very first 40% retracement if it occurs in 90 seconds from release time (till 10:01:30am) – and if spread at the time of your entry is at 2 pips or less. Set stop/loss at 10 pips, and set take/profit at 10 pips.

    The retracement will happen within seconds. Don’t draw anything on your chart, and don’t try to get a perfect entry. As soon as you see approximately 40% retracement on your chart, compared to the initial spike, click to enter without any hesitation.

    If the move either up or down was less than 12 pips during the first 30 seconds, then the actual number of the report did not generate sufficient interest in the market, and you simply skip the trade. If your spread at the time of desired entry is more than 2 pips, then skip the trade.

  4. If by 10:15:00am, so 15 minutes after the report release, neither your stop/loss nor your take/profit points were hit, then close the trade automatically at market price of the time.


Previous Example: on May 3 2012, at 10:00am, USA Non-Manufacturing PMI number was released, so in the first 10 seconds, the price of USDJPY spiked down by 141.0 pips from 80443.0 to 80302.0. Then price started retracing, and within about 12 seconds retraced to 40% level of 80358.0. So you would Sell at 80358.0, set a stop/loss at 80368.0, and set a take/profit at 80348.0. 15 minutes after the report neither take/profit nor stop/loss were hit so position was closed manually at 30.0 pips of profit, given that your spread at the time of the entry was at exactly 2 pips.


Be patient, and do at least 20 "second wave" trades, before getting frustrated and quitting.

Once you become good at it, you will be able to win on average 7 to 8 out of 10 trades.

Keep win to loss ratio at 1:1. Tweak it only after you are consistently profitable with 1:1.

Remember, it does not matter whether you make or lose 10 pips or 100 pips on a trade. What matters is how much money you make or lose on a trade. When risking 10 pips, simply put up 10 times more lots than you would when you risk 100 pips, and at the end you will make or lose the same amount of money. Yes, spread to pips targeted ratio matters, but these news "second wave" moves have such high probability of success that they somehow make up for the very high spread to pips targeted ratio (2 to 10), which is a small miracle in itself.


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Diamonds Trading Signals Trade Plan

Australia Interest Rate ⋯ 12:30am NY time (Tuesday, July 7)

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Traded currency pairAUDUSD
Initial spike duration limit15 seconds
Initial spike price action threshold20 pips
Triggering retracement percentage35 %
Retracement duration limit60 seconds
Maximum trade hold time after release15 minutes
Stop loss15 pips
Take profit15 pips
Maximum spread3 pips


  1. Set up single click execution on your broker platform, and if possible, pre-determine default stop/loss and default take/profit to 15 pips, so that when you click to execute your order, your platform will automatically set your stop/loss and take/profit at 15 pips from your entry price. Do not try this with brokers that don’t offer single click execution.

    If your platform does not allow to pre-determine default stop/loss and take/profit, then after entering the trade, simply set the stop/loss and take/profit points manually.

  2. Pull up either tick, 1-second, 3-second, or 5-second chart, and at 12:29:45am, so 15 seconds before the announcement, start paying very close attention to the price action of AUDUSD on your chart.

  3. If between 12:30:00am and 12:30:15am, so during the first 15 seconds after the report, you see AUDUSD move up or down by 20 pips or more, then enter in the direction of the initial spike at the very first 35% retracement if it occurs in 60 seconds from release time (till 12:31:00am) – and if spread at the time of your entry is at 3 pips or less. Set stop/loss at 15 pips, and set take/profit at 15 pips.

    The retracement will happen within seconds. Don’t draw anything on your chart, and don’t try to get a perfect entry. As soon as you see approximately 35% retracement on your chart, compared to the initial spike, click to enter without any hesitation.

    If the move either up or down was less than 20 pips during the first 15 seconds, then the actual number of the report did not generate sufficient interest in the market, and you simply skip the trade. If your spread at the time of desired entry is more than 3 pips, then skip the trade.

  4. If by 12:45:00am, so 15 minutes after the report release, neither your stop/loss nor your take/profit points were hit, then close the trade automatically at market price of the time.


Previous Example: on November 5 2012, at 10:30pm, Australia Interest Rate number was released, so in the first 10 seconds, the price of AUDUSD spiked up by 38.2 pips from 1.03690 to 1.04072. Then price started retracing, and within about 30 seconds retraced to 35% level of 1.03938. So you would Buy at 1.03938, set a stop/loss at 1.03788, and set a take/profit at 1.04088. 2 minutes after the report the take/profit was hit yielding 12.0 pips of profit, given that your spread at the time of the entry was at exactly 3 pips.


Be patient, and do at least 20 "second wave" trades, before getting frustrated and quitting.

Once you become good at it, you will be able to win on average 7 to 8 out of 10 trades.

Keep win to loss ratio at 1:1. Tweak it only after you are consistently profitable with 1:1.

Remember, it does not matter whether you make or lose 10 pips or 100 pips on a trade. What matters is how much money you make or lose on a trade. When risking 10 pips, simply put up 10 times more lots than you would when you risk 100 pips, and at the end you will make or lose the same amount of money. Yes, spread to pips targeted ratio matters, but these news "second wave" moves have such high probability of success that they somehow make up for the very high spread to pips targeted ratio (2 to 10), which is a small miracle in itself.


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