Trading on announcements is one way to grab a few (or a lot of) fast moving points. The example below I noticed when opening my trading console in the lunchtime – was too late to open a trade (and anyway I’m still on a Demo Account). However, whenever a hike like this happens you can always take advantage of the usual ‘rebound’, but more on that later.
Ok, case in hand, as you can see from the image above, we have a news announcement regarding Bank Of England Interest Rates. As soon as I saw this I opened up my GBP/USD chart and wahay, look at those points and that time frame below.
If you listen to ‘pros’, they will tell you that there are three potential directions a currency pair will take on an event like this – way up, way down, or nowhere. No one can truly predict what is going to happen and how the market will react. So why am I telling you this if I can’t impart some great trading wisdom? Well, this site is all about ‘opening eyes’ and learning.
As you will see from the graph, something big happened (not as big as the gold shifts the past few days – something else to investigate). As a learner myself I am wondering how exactly to deal with these announcements. Options – placing orders, and scalping.
At my present level of experience scalping would be the option, but I’m guessing there are some pros out there who would have set up some orders the night before – I’m guessing a couple of ‘hedge bets’ (either way) with low stop losses, and not too ambitious Take Profits. Of course this would probably have to be done the night not the month before.
On the subject of scalping though, the move was so fast you would have had to have been glued to the screen, which for some part time traders is not an option. And, you would have to ‘hop on’ at the right point.
However, whenever these rapid swings occur, busting through the Bollinger bands, usually, when the ‘knee jerk’ subsides, there is a ‘reconciliation’, and a couple of hours later in this case, several point had been gained in the opposite direction. Perhaps for a more conservative trader this would be a sounder trading option, but then again, maybe my guess at ‘hedging would be also a Conservative and highly profitable option. Any comments on this would be much appreciated, especially from Forex traders who are experienced in this field.
(Hmm, I did notice that unless I’m mistaken none of the traders that I am copying took advantage of this situation).