How to approach news breakout: this occurs upon the release of major economic announcements and can sometimes trigger moves of over 70 pips within few minutes.
When a major fundamental announcement is to be released, few minutes to this time we see the market moving in a very choppy sideways or counter trend. During this time, breakout traders who straddle the news position themselves well ahead of the said news event to take advantage of the initial price spike. Note that not all news event support this strategy. Using this strategy, you ay only need to be in the market for about 5minutes and you are out with profit or a little loss.
You use this strategy by first of all knowing the time of the news release using the economic calendars then find out if the news event supports this strategy. Having done the above, you then go to your platform 5 or 3 minutes before the news event and set up your orders.
The news event that supports this strategy are interest rate statements from US EUR/USD, GBP/USD and USD/JPY. EUROPE- EUR/USD, EUR/GBP, EUR/JPY. And EUR/USD. UNITED KINGDOM-GBP/USD, EUR/GBP, GBP/JPY, NEWZEALAND AND CANADA. Other news events that supports this strategy are non-farm payroll from US , unemployment rate and employment change from Canada and Australia, German Zew economic sentiment, BOE MPC meeting minutes e.t.c.. the minimum each of this news events can generate is 30pips within 10 minutes so do not be greedy with profits. If you take only 20pips per event on a standard account, with just 10 events per week that will give you $2000 per week. Also try factoring in risk.
Technical breakout; this kind of breakout occurs without any news event in sight. It can happen during the opening hours or close of the market. Before the opening of certain currency pairs and market sessions, the market is usually in a very choppy mood and quiet too. During this time the big moves are being planned and you should learn to move along with them. Quite often the market would have determined the direction it wants to move before it becomes quiet attempting to determine where to breakout.
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