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News Trading Profitability

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My first exposure to ¨news trading¨ was almost 20 years ago when a former London trader explained one of his systems to me. Generally, his heyday has been in 80´s and his systems were simple. The ¨news system´s¨ design was about like this: after the news come out, measure the price move, then wait for X percent retracement from the price peak and trade for further retracement to Y percent. The retracement percentage values probably were Fibonacci figures. It made sense then as the retracements after the intial price move were quite consistent price behaviour pattern back then.

A more recent ¨news trading¨ method is to trade the news (economic releases, in this case) is to trade only if there is deviance from the forecast. If the news come out at or close to the forecast, no trade is placed. If the news come out with strong enough deviance from the forecast, the trade is opened within seconds from the news release. There is a price target based on statistics about historic price action following the release of the data. Some limited performance stats are available here. According to the system owner, the stats since 9/2009 are:  419 total orders prepared, 99 orders met the trade entry criteria, out of those 82 win trades  and 17 loss trades, total pip gain at 996 (or about 10 pips on average per trade). The system doesn´t seem to be packaged as a service, but there is a free application named Klik to open the entry trade automatically (you still have to exit the trade yourself) and support through skype.

 

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Written by A.S.

January 31, 2011 at 2:09 pm

Posted in Uncategorized

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