For those of you thinking of scalping or Trading the News

Quote from MickMason:

Hi secxces & all

Safety net, is there such a thing on NFP release? Can't say I would have enjoyed being on the wrong side in Aug '04, people were getting filled 150pips away from their stop and coincidentally a week or two after that marketmakers decided they wouldn't guarantee stops after all! Who was it that reversed all the overleveraged profitable trades, FXCM or Refco or someone, news scalpers doing a jig thinking they had trebled their accounts in 5 minutes soon came back down to earth! Placing orders either side of the market prior can end up with both being triggered and double the loss, imho. Is a potential fast buck really worth all that risk?

Maybe it's just me getting too old for all that excitement!


Mick
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This is absolutely correct. The question is it actually worth the risk? But I assume, in any form of trading, that question is always measured. Depending on what system, approach, or general view one looks at a way to place a positive probable trade, it would be ultimately up to that person. As mentioned, there is a way to do it, im sure anyway can see that. Bracketing the NFP, im not saying this is a smart idea. Im saying that this is the type of form it can be done.

For example, lets just say you know statistically speaking, the NFP moves 100 pips in at least one direction when it comes out. (I dont really know, this is for example purposes) And all you wanted to do was make 10 pips only. You could set a entry and stop within the estimated 100 pip range in both directions.

Now, when it comes to your stop loss, well again you are right. The slippage on this can be insane. Obviously, if the trader is smart, he will have different ways to counteract this. Possibly hedging or something. Im not sure. Like I said I dont do it.

As for one of the brokers reversing the profits. I believe I did read about this, wether they did or not act in a dishonest manner I have no clue. The way i heard it was it was a charting data error, and the 200 pip fly up that everyone grossed on was actually only like 100 and by the time they fixed it, profits had also already stumbled back to earth. Im not sure on this one. But, in any case, definetly weigh the risk.

All in All, I think news trading can be very effective approach, depending on the traders systematic process. However, trading NFP, imho, is not worth the possible risk (i.e. slippage).

- secXces
 
Here's a sorry example of trading NFP which I found on another forum, looks like the guy lost 10% of his account in as many minutes :eek:

The link shows a video of the platform as it happened (it's a horror movie and not suitable for those of a nervous disposition, shame there's no audio!):

elitetraderdoesnottoleratespam/videos/untitled/untitled.html

I'm not sure FXCM were to blame as he suggests, it's just the risk attached to trading data I guess, but what can you do when you can't get a stop filled apart from sit and watch as the month's profits melt away.


Mick



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I had been recently testing the new NO DEALING DESK option with
FXCM (Forex Capital Markets) as they advertised rapid execution
even during news releases ie. macroeconomic reports. I wanted to
test it on Non-Farm-Payrolls (November the 3rd, 2006) and found
following:

1. FXCM filled me on my resting order even before the price in the
streaming prices window displayed the price (rate) I wanted to
have.

2. The stop/loss was not executed I had to manually exit the trade.

3. FXCM filled me on the highest ask priced noted on this day. (17
pips slippage)

4. FXCM executed the trade whole minute and displayed it after the
market went down ca. 100 pips. I was unable to change the
parameters of the order during that time.
------------------------------
 
fcxm are crooks allright, as all of the dealing desk/cfsd/spreadbetting/fx spot dealers are. but u gotta wonder how ignorant these people are since i tell u, on fx futures as soon as 1 minute has passed after a major news release bid ask spread tighten to 1 pip and using lmt orders u are in and out, obviously with no slippage whatsoever. why the heck do these guys insist on doing their biz with these thieves, all those that defend fx spot are either imbeciles or involved in the biz themselves. freaking amazing.
Quote from MickMason:

Here's a sorry example of trading NFP which I found on another forum, looks like the guy lost 10% of his account in as many minutes :eek:

The link shows a video of the platform as it happened (it's a horror movie and not suitable for those of a nervous disposition, shame there's no audio!):

http://www.fx-analytics.com/videos/untitled/untitled.html

I'm not sure FXCM were to blame as he suggests, it's just the risk attached to trading data I guess, but what can you do when you can't get a stop filled apart from sit and watch as the month's profits melt away.


Mick



----------------------------------
I had been recently testing the new NO DEALING DESK option with
FXCM (Forex Capital Markets) as they advertised rapid execution
even during news releases ie. macroeconomic reports. I wanted to
test it on Non-Farm-Payrolls (November the 3rd, 2006) and found
following:

1. FXCM filled me on my resting order even before the price in the
streaming prices window displayed the price (rate) I wanted to
have.

2. The stop/loss was not executed I had to manually exit the trade.

3. FXCM filled me on the highest ask priced noted on this day. (17
pips slippage)

4. FXCM executed the trade whole minute and displayed it after the
market went down ca. 100 pips. I was unable to change the
parameters of the order during that time.
------------------------------
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Quote from Bitstream:

fcxm are crooks allright, as all of the dealing desk/cfsd/spreadbetting/fx spot dealers are. but u gotta wonder how ignorant these people are since i tell u, on fx futures as soon as 1 minute has passed after a major news release bid ask spread tighten to 1 pip and using lmt orders u are in and out, obviously with no slippage whatsoever. why the heck do these guys insist on doing their biz with these thieves, all those that defend fx spot are either imbeciles or involved in the biz themselves. freaking amazing.
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Makes you wonder right?

Is it really just the fact that these people can't scrape together more than a few grand to trade with, that they have little choice but to not trade on an exchange where vast majority of financial instruments have been traded for decades?

I remember starting out daytrading equities, it was a given that you start out with at least 50k (no 4:1 back then) to even attempt it full time. Nowadays you have a whole crop of people looking to make it big with 200:1 leverage and 4-figure accounts.
 
Why, oh why, would ANYBODY subject themselves to such blatant risk exposure. I was teasing Electric the other day about "gunslinging" in the Forex arena. I now have to view this report trading idea under a different light: While bending over and dropping trou, why don't you simply tell big Bubba, your cellmate, " Here's some KY Jelly - just please be GENTLE!" Hahahaha...

Others have already correctly stated that it is very doable to trade report release volatility using the major currency futures on the Globex platform. Sure, as of yet, you cannot trade the exotic pairs, but most of the important reports can be viewed in the futures the same as a Major/USD cross. Any fundamental mkt movement will be highly correlated in these instruments, if you understand the spread (vs. spot) on the futures contract, and that some prices are presented as the reciprocal value of the actual forex cross.

The important point about trading the Globex futures is that it avails a trader to the most transparent and level playing field as exists in the industry. I trade most the reports, using a typical high-speed cable internet connection, IB's TWS, and the Bracket Trader frontend. I avoid the first 30-60 secs., which can, and often do, create some untradable price gyrations. But once directional thrust is evidenced, a trade is entered on a buy or sell stop, and the initial order is accompanied by hard target and stop orders courtesy of the frontend default settings. If the trade is correct, it's very easy to quickly adjust the stop and target for maximizing profit and minimizing risk. I love chasing the green bars up the ladder (DOM) with the stop - money in the bank. And when I'm wrong, I also can depend on my stop taking me out - having never experienced more than 2 or 3 ticks slippage in very fast mkts. Fills are basically instantaneous, and I still have to stop and marvel, sometimes, over this awesome technological feat.

If ya haven't traded the Globex, give it some serious thought - you might like it!
 
globex is king. if these guys really knew how fair and orderly currencies futs on globex really are would trade trough them immediately. i am not a pro-fx trader but i made many €/$ trades and most of 'em soon after major news events. i tell ya, in and out with lmt and zip problemo. and another point to keep in mind that with ib if u hit a lmt price and price move in your direction by a pip or more in the meanwhile, u get the improvement over your lmt. look at what happened at this poor sob trading trough fxcm, when he wanted out price moved in his favor and would have saved 30 bucks trough globex but no, not gonna happen on a dealing desk..what u hit or lift there is what u gonna get regardless if mkt has moved to a better price below/above your lmt.
 
Even if globex is not the liquidity center for the fx markets, the arbs ensure that the quotes on globex reflect the most current price.

The only priority at a retail fx broker is profiting at their customer's expense. You may ask how a business model such as this can survive in the long run -- the answer is that it can't. The bucketshops know that retail fx is a fad that will die out soon enough, there is only so much dumb money to go around.
 
Never ceases to amaze me how many people think there is only one (usually there) way to trade or one firm/market place you should trade through.
 
Quote from illiquid:

The bucketshops know that retail fx is a fad that will die out soon enough, there is only so much dumb money to go around.
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Are you sure about that! Casinos and bookies have been around a long while and will be for a long while to come, as long as there's greed then there'll always be suckers out to try and make (lose!) a fast buck.

You lot slag off trading spot but it's all I've ever traded and it's been very kind to me, sure as heck beats working for a living!


Mick
 
Quote from MickMason:

Are you sure about that! Casinos and bookies have been around a long while and will be for a long while to come, as long as there's greed then there'll always be suckers out to try and make (lose!) a fast buck.

You lot slag off trading spot but it's all I've ever traded and it's been very kind to me, sure as heck beats working for a living!


Mick
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if u use traditional strategies concentrated on the major pairs and not arbing different quotes from different providers that i think it is lame anyways because u can always arb globex vs cme, i fail to see how u can not be better off trading trough an exchange. just the money u would save from price improvement and instant execution would make the transition worthwhile.
 
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