Straddle Trading Strategy To Forex News Trade
The straddle trading forex strategy is a neutral forex news trading strategy.
What does "neutral" mean?
Well, here it is:
I don't care which way the price moves after the news is out.
All you care about is that you want to be able to catch the price action regardless of which direction it's headed after the news release.
How do you do that?
does this through so-called forex straddle trading.
Straddle trades are actually forex breakout trade:
- Place two opposite chart pending orders and wait for a one-way breakout.
- If a pending order on the chart is activated by a chart breakout, immediately cancel the pending order on the other market.
Currency pairs: EURUSD, AUDUSD, NZDUSD, GBPUSD, EURGBP, USDJPY, USDCAD, USDCHF
Timeframes: 5 or 15 minutes.
- identifies the next level of resistance on a 5 or 15 minute timeframe. We also identify the next level of support in 5 or 15 minute timeframes.
- Approximately 1 minute before the forex news release, place a pending buy stop order 2-3 pips above the resistance line. Also place a sell stop order 2-3 pips below the support line.
- Stop Loss: Place 3-5 pips below the support line of a buy stop order. For sell stop orders, place your stop loss 3-5 pips above the resistance level on the chart.
- Take Profit Target (TP): Aim for 60-100 pips or calculate your own Take Profit using a 1:3 Risk to Reward (R:R) ratio.
Advantages of Straddle Trading Forex Strategy
- Simple Forex News Trading Strategy
- is a reliable trading system if there is no price bounce before or immediately after the news release and the price does not rise above the chart support and resistance levels. Before the forex news is released.
- quick wins, 50-100 pips in just minutes
Disadvantages of the Straddle Trading Strategy
- Price Whipsaws can activate trades and turn off the stop loss before or immediately after the news release.
- This can also occur when market spreads widen during news hours.
- Consider not trading if the distance between the support and resistance levels on the chart is more than 50 pips.
- Based on the forex news, price may pretend to move in the right direction, but after just a few minutes, it can completely reverse and reach a chart stop loss. Therefore, if you don't cancel the other pending market order immediately, it will be activated as well, and if the market changes direction afterwards, two stop losses may be activated.
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