Trading around announcements
- Thread starter alainniala
- Start date
Thanks
Yes you can make money trading announcements. In fact I made a profit buying some bond futures on today's payroll number.
Requirements are:
i) Fast execution platform (connection, software etc)
ii) Fast and accurate news service, and preferably someone to read through the numbers for you (to look for revisions etc once you have reacted to the headline number)
iii) Experience at interpreting the numbers and the likely market reaction
iv) Good order placement skills
Results can be volatile - announcements can provide very rapid and sizeable losses, due to the very fast and large moves. Slippage on stops and market orders can be very large. Often you will not have time to place a stop, so you have to do it manually. It is easy to get whipsawed, as many mildy bullish (or bearish) figures have a quick pop, then a pullback, and only then the real rally.
IMO it takes a couple of years to get really good at trading figures. There are several traps it is easy to fall into, that you only learn through experience (e.g. bullish figures that result in the market falling). And because everything is happening so fast, small mistakes are punished severely and bad mistakes can prove very expensive indeed. It is actually quite easy to just press the wrong button and lose money, or mistake a bullish number for a bearish one in the heat of the moment. Sometimes you can do everything right and still lose quite a lot.
Despite the risks, I think announcements provide very good trading opportunities. My average profits on big announcement days like non-farm payrolls are much higher than my average profits on normal trading days. Figures create volatility and volatility is good for traders.
Requirements are:
i) Fast execution platform (connection, software etc)
ii) Fast and accurate news service, and preferably someone to read through the numbers for you (to look for revisions etc once you have reacted to the headline number)
iii) Experience at interpreting the numbers and the likely market reaction
iv) Good order placement skills
Results can be volatile - announcements can provide very rapid and sizeable losses, due to the very fast and large moves. Slippage on stops and market orders can be very large. Often you will not have time to place a stop, so you have to do it manually. It is easy to get whipsawed, as many mildy bullish (or bearish) figures have a quick pop, then a pullback, and only then the real rally.
IMO it takes a couple of years to get really good at trading figures. There are several traps it is easy to fall into, that you only learn through experience (e.g. bullish figures that result in the market falling). And because everything is happening so fast, small mistakes are punished severely and bad mistakes can prove very expensive indeed. It is actually quite easy to just press the wrong button and lose money, or mistake a bullish number for a bearish one in the heat of the moment. Sometimes you can do everything right and still lose quite a lot.
Despite the risks, I think announcements provide very good trading opportunities. My average profits on big announcement days like non-farm payrolls are much higher than my average profits on normal trading days. Figures create volatility and volatility is good for traders.
Just a question, doesnt it slow down your computer?
Hi joethemoustache,
I guess it would if you have a desktop that's slow.
I use two desktops for trading.
However, when I'm traveling (like at a relatives home in another country) and I do the same type of trading and recording on my laptop..
.it does slow down my laptop and my laptop is not as powerful as my desktops.
NihabaAshi