Yes or no and why? What logical reason? No because if I was looking to buy support and it pushes price down the sentiment is now bearish?
should I take trades when news causes price to move into my entry level?
- Thread starter iamnewuser911
- Start date
Simple answer: Fail to plan, plan to fail.
If that is how your plan was designed to operate then yes.
If that is not how your plan was designed to operate then no.
Just don't go manipulating your plan to fit market conditions !
Your reasons to execute are different from mine, are different from a bank's are different from a pension fund. Hence you need to have an execution plan in place to suit YOUR needs.
Remember afterall, "Markets for Dummies 101" ... if you're buying, someone else is selling it to you (and vice versa).
If that is how your plan was designed to operate then yes.
If that is not how your plan was designed to operate then no.
Just don't go manipulating your plan to fit market conditions !
Your reasons to execute are different from mine, are different from a bank's are different from a pension fund. Hence you need to have an execution plan in place to suit YOUR needs.
Remember afterall, "Markets for Dummies 101" ... if you're buying, someone else is selling it to you (and vice versa).
News doesn't make the price move to your entry-level: imbalances between buying pressure and selling pressure (albeit sometimes prompted specifically by traders' reactions to news) makes that happen.
They're two very different things, and an appreciation of the difference between the two carries within it the answer to your question, in my opinion. You need to have tested this and have an informed answer that's directly applicable to your own trading, knowing whether or not entering trades under these conditions results in collective net gain or collective net loss. Any other answer could only be a guess.
In simple terms, for some people the answer will be "yes" and for others "no". Only testing can give your "right answer". (Call me pedantic, but this isn't at all the same as being "a 50:50 thing", needless to say.)
My suggestion: do it if it enhances your edge and doesn't impose unacceptable additional risk (e.g. of greater slippage); avoid it if that isn't so. Trade what you've tested and proven. If you haven't, then do that before deciding to trade it.
They're two very different things, and an appreciation of the difference between the two carries within it the answer to your question, in my opinion. You need to have tested this and have an informed answer that's directly applicable to your own trading, knowing whether or not entering trades under these conditions results in collective net gain or collective net loss. Any other answer could only be a guess.
In simple terms, for some people the answer will be "yes" and for others "no". Only testing can give your "right answer". (Call me pedantic, but this isn't at all the same as being "a 50:50 thing", needless to say.)
My suggestion: do it if it enhances your edge and doesn't impose unacceptable additional risk (e.g. of greater slippage); avoid it if that isn't so. Trade what you've tested and proven. If you haven't, then do that before deciding to trade it.
Hi, I was trying to find some logical answers on why not and why to instead of testing it using statistics then blindly trade it because "backtesting" results shows to do this.
How about you yourself? Let's say it's 25 pips from your level you want to enter, Sales comes out, touches, do you enter or skip? I know this is too simple of a yes or no answer but rather to understand sentiment as its always case by case for these scenarios. And yes! I'll be testing snd colleting data while I find logical explanations why.
Definitely no. The risk of slippage is too high. And "testing" is not going to solve it, because in such conditions is really hard to make a reliable test.
There are people that are "news traders", but you need some technology to do it, and the non-institutional trader doesn't have it. You need to know about market microstructure to know why news trading generates so much slippage. But the brokers or markets-makers offering you "fixed spreads" doesn't solve the problem. It's not a spread problem, is an order book problem (market microstructure). If you are into high-frequency trading, pay for level 3 tick-by-tick data, have a virtual private server with ultra low latency near the exchange and all that kind of high-end stuff, then you can trade the news.
For the traditional trader it's worse than gambling.
If you need to know even more, let me know and I'll give it a try.
There are people that are "news traders", but you need some technology to do it, and the non-institutional trader doesn't have it. You need to know about market microstructure to know why news trading generates so much slippage. But the brokers or markets-makers offering you "fixed spreads" doesn't solve the problem. It's not a spread problem, is an order book problem (market microstructure). If you are into high-frequency trading, pay for level 3 tick-by-tick data, have a virtual private server with ultra low latency near the exchange and all that kind of high-end stuff, then you can trade the news.
For the traditional trader it's worse than gambling.
If you need to know even more, let me know and I'll give it a try.
Basically, you are asking if this is a good idea to average down ?
Of course not, news or no news.
If your timing was not correct at start, market will give you the opportunity to trade again your prices. This is a classic fool trap. You still believe you are on the right side of the trade, and because prices seem again "correct", you double the ante. And lose twice.
The only exception is if you played sucessfully a breakout, and you face a pullback.
This is the only case when you can average down because the trend is with you and not against you.
CM
What if spreads were fine? I'm talking about just normal price moving not spikes like NFP. Maybe mid level news? USDCAD past 2 hours?
No.
1) Identify Support.
2) price moves down because of mid importance news
3) hits entry level/interest level
I hear you, but this wouldn't be my own approach. I trade only what I've tested and proven empirically.
(My perspective: I suspect that what you're referring to above as "logical answers" is probably going to turn out in actuality to be a collection of guesswork, some helpful information, some inapplicable theory, and generally a mixture of things that do and don't apply to whatever you're trading and how you're trading it, with little if any way to distinguish between them, and that it's therefore more likely, realistically, to lead to confusion than to accuracy.
)Skip.
Not because I can reliably show, with confidence, that it collectively loses money for me, but because my uncertainty about it together with the hugely increased risk-factors to which I'd expose myself by "trading the news", takes it well outside my own risk-management parameters. For myself, I wouldn't touch it. But that doesn't necessarily make that the "right answer" for you (which is why I didn't even offer it in my original reply).
Then please excuse my mentioning (a) that you haven't given enough information for any answers/explanations you get to be "logical" ones; and (b) that for myself, I would need to have done statistically significant testing before being able to interpret what's "logical" and what isn't, regarding the specific situations I'm looking at.
Most likely so - I do agree, in principle. It is for me, but I do actually know that from examining it carefully. Which is why I'm pretty comfortable, for myself, saying "skip". (But still, we might both be wrong, and iamnewuser911 needs to test it for himself to produce his own answer. And even if/when we're both right, the process of doing so will make him a better trader.)
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