We see lots of new traders in the chat here on Trading View making poor decisions around news based trading. Yes, catching a big move can be profitable, but it is a gamble and one that we as money managers should not be willing to take.
Ask yourself this, if you had 1M of client money at stake, would you bet on the direction of a short term news spike?
A much better way of trading the news is to let the market tell you which direction you should trade, then trade off of a Fibonacci level or a retest of structure.
Wait for the initial move to give you direction
Place a Fib study from the swing high to swing low
Wait for price to retrace into fib/structure level
Place your entry and stop loss accordingly
A few recent examples of our trading method can be found below:
EURUSD: Two orders opened. the first was opened 2 pips above the 38.2% Fibonacci retracement, and the second was opened 2 pips above the 61.8% Fibonacci retracement.
USDCAD: Two orders placed, one at the 38.2% Fib and 1 at the 61.8% Fib, however only 1 got filled.
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GBPUSD News Trade after CPI on Tuesday 12th September:
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USDCAD News Trade - 2 positions open and both in great profit. Now managing this trade: