TRADING NEWS ON FOREX PART 2
During volatile periods following a news release, the importance of prudent risk management cannot be overstated.
Stops are highly recommended, but in this case, traders may prefer to use guaranteed stops (where available) over normal stops. Guaranteed stops do have a fee, so check with your broker; however, this fee is often insignificant in comparison to the amount of slippage that can occur during such volatile periods.
Traders should also consider reducing their standard trade size. Volatile markets can be a trader’s best friend, but they can also significantly reduce account equity if not managed properly.
As a result, in addition to using guaranteed stops, traders can look to reduce their trade sizes in order to manage their trading emotions.
When developing a forex news trading strategy, traders can take a number of approaches that are dependent on the timing of the trade in relation to the news release.
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