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WTF?! Why do I lose w/ FPA News Trades?

Discussion in 'Beginners Bootcamp' started by rd122481, Jan 19, 2010.

  1. rd122481

    rd122481 Recruit

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    My broker is Forex.com. I am only trading in their demo acct, but I do have a live acct with them. Anyways... I try to trade the news signals given by FPA & it is like I'm ALWAYS late no matter when I get in? Today's signal in the GBP: My transaction took place @ 4:30:32 & my price was still @ the high end...too high to attain any profits!! Then it retraced a bit (to a tune of -25 pips) then went back up, but never into profit. WTF am I doing wrong? Is my broker preventing me from making money? I have my TV on w/ CNBC blaring away so I hear the report as soon as it is out. WTF?!:unhappy:
     
  2. cowmadagan

    cowmadagan Sergeant

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    Don't worry...relax a little...Here's how it's done.
    First, it depends on how quickly you get the news compared to the release. I've had it a couple times where I got the data a full five seconds before a market reaction. That's the only way you'll get all of the first big spike.
    Now, that said, you should know that getting the big spike is a lost cause. You should never expect to get it, as all the big boys have supercomputers that feed in the data and put their orders in within milliseconds.
    What you can expect, is to be able to catch the retrace which is the result of the original take profit. There are two ways to do this: The dangerous way which works off intuition, and the safe way which takes patience.
    The dangerous way is to watch the initial spike and guess when the take profits are going to start, at which time you put in your position in the opposite direction of the spike, and immediately prepare your own take profit position with your cursor hovering over the button to put it in. You don't go to the bathroom, the fridge, or if your foot spontaneously combusts, you don't put it out. You wait until you have a little teensy profit, and get out.
    The second can be done at the same time as the end of the first by ending your first trade by entering more lots than the initial deal had, or just by waiting until it looks like the first take profit is finished and the action will resume in the direction of the spike.
    Therefore:
    Don't get the news and click your deal button as soon as you can. That doesn't work.
    In some charting systems you can highlight areas of the one minute chart and watch the most recent candle. With practice you'll be able to do what I've described.
     
  3. Ricex

    Ricex Sergeant

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    Sorry to hear your not making pips, but the simple fact is trading news is not as easy as some people would have you believe.

    A solid understanding of what may happen with a specific report in the current market conditions is essential if you want to profit.

    Your broker hasn't helped the situation either by increasing his spread and then filling your order much higher up than you would have liked. All this is quite normal and needs to be taken on board when your evaluating your risk.

    Choosing which news event to trade is also very important, be selective.
    At least your only in demo, I imagine your not alone today and a few have been burned by this and lost real money.

    Today traders needed to be in and out pretty quick for their 20-30pips.
     
  4. rd122481

    rd122481 Recruit

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    Cowmadagan,

    So...Don't try to catch the initial spike. I should try to get in going the same direction as the intial spike, just after the "take-profits" of the intial spike?
     
  5. cowmadagan

    cowmadagan Sergeant

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    Yes, that's what I mean by the 'safe' way....

    Of course, what's safe in forex anyways?
    What Ricex said is absolutely crucial, and that's why FPA triggers rock, but you should also know what the numbers mean overall for the economy that's releasing the data, and keep in mind what's going on in other countries.
     
  6. rd122481

    rd122481 Recruit

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    Wow! I'll give that a try then!! Hopefully when the BOC releases their interest rate decision. THANK YOU SO VERY MUCH!!:)
     
  7. Pharaoh

    Pharaoh Colonel

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    Even if you've got instant access to news data a great internet connection, don't forget that your broker can make news trading difficult or even impossible.

    If you do make some money trading the news, do a small withdrawal shortly afterwards. That's when a lot of brokerages will decided to retroactively cancel trades. Better to find out soon that to trade for weeks or months and then watch them steal your profits away.
     
  8. cowmadagan

    cowmadagan Sergeant

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    Oh right...one last thing...the initial profit taking in my experience stops at about 25% to 50% of the initial spike...so if you're confident in the fundamentals, don't wait for it to go below 50%.
    If it does go below 50% you've just got a visit from booga-booga-land, which might mean there's a massive number of real money guys who guessed incorrectly and they're unwinding their positions, (like the last NFP..) or that the market just doesn't care enough about the news because they have other intentions.
    That means these spike tricks aren't a 'make money every time' plan. They're plans that if successful mean that you can take the rest of the day off trading (you shouldn't decide that until at least 45min after the release), or that you're going to be doing overtime to break even on the day. If you do the second one, be sure to write it on my 'bullet dodging' thread.
     
  9. Music Man

    Music Man Corporal

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    FWIW, I don't try to decide the direction. I place opposing stop orders above and below the price about 5-10 minutes before the news. That way, I catch the big spike. I don't set a take profit, I just let it go up and then set a trailing stop. It's not risk-free, but it keeps me from needing any advance knowledge of the news content.

    MM
     
  10. Ricex

    Ricex Sergeant

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    Why would you trade that? the BoC will be very unlikely to change their interest rate, it's a non event.

    The point behind news trading is to look for news events that will shake things up, this is why trade signals carry with them 'deviation' figures. Change, either very good news or very bad news is what you are looking for. Things that stay the same do nothing for the market.

    If Canada raise interest rates I'll eat a prune....... and I really hate prunes.
     

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