POST-NEWS RETRACEMENT TRADER

This strategy is by far the most consistently productive and should be part of the initial
set of strategies used by beginning traders. The idea is that after the break of the news,
there will be retracement—the price will move from a high to a low, or from a low to a
high and then retrace. The trader waits for the retracement failure and looks to enter a
trade on the direction of the original break. The retracement failure point is most likely to be a Fibonacci-based pattern. After a news release, there is the initial move, but there
can be many retracement attempts and therefore many opportunities to trade.
An aggressive version of this is to wait for the move after the release of the news, and
then when it stops and reverses, put on a reversal trade. This strategy of fading the move
adds a scalping tactic and provides more opportunity. But the far greater percentage
payoff is on trading post-news retracement. If the price does retrace to a Fib point, then
the trade can employ the setups that work in other times.
SUMMARY
Which economic data release should you trade? Every currency pair has economic news
that affects that pair. It’s hard to know in advance which ones will be important. The key
factor is whether the market is surprised. Check your economic calendar and highlight
key news releases. Focus on those releases that will report on inflation, job growth, and
housing data. Initially, be sure to use low leverage or test your skills in simulation.




By ABE COFNAS