8/19 Analysis: Why We Don’t Trade News
Prior to the NY open, we see the market is just a mess. Most currencies are going sideways and are very choppy. These are not ideal conditions to trade as the market is anticipating a major news announcement within 30 minutes.
Once the news is announced, we see this:
Under normal conditions, this is exactly what we want to see. The strongest currency with a steep line to the right indicating huge momentum and the weakest currency diverging away from it indicating the same thing on the downside.
But, with news there is often a whipsaw effect. Just moments after the news is announced, we see this:
The CHF is now sharply spiking back down and the USD is sharply spiking back up.
When you watch the full video analysis, I’ll show you how in real time you could have been in a losing position of up to 80 pips if you impulsively entered this trade on the news:
You can see that our Currency Strength Indicator is an effective tool for picking out the highest probability, lowest risk trade set ups while avoiding market conditions that aren’t favorable. If you keep using this tool every day along with our daily Forex analysis, you will increase your win rate and be on your way to becoming a profitable trader long term.
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