Should You Close A Trade Before A Big News Event?
It all depends on two variables; what type of event it is and what type of trade you have taken?
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The answer is a little bit tricky because it really does depend on a couple of variables, two actually.
The first one is what type of event you are waiting for. So if it's just a low expectation event, something like, in today's session was a good example, we had CPI for three major economies. We had CPI for the UK, the EU as well as the XAG but given the current sentiment, these were really low expectation events in terms of the outcomes. So if it's these types of low expectation events, then you could consider taking a trade in the morning, maybe even before the event, if it's scheduled in the afternoon.
However, if it's a highly anticipated and more important event, like a very important central bank meeting or highly anticipated economic data point, then you're probably gonna be better off waiting for the event to play out before you take a trade, unless of course you are planning to trade into the event, but if that is the case, then arguably you would have already been in the trade way before that.
Also keep in mind that U.S. data will of course be important for all the currencies because the dollar is so important, major events for the U.S. might affect something like the Aussie Yen, for example, if it's a good enough, if it has a big enough impact in terms of the overall risk flow. So definitely something just to keep in mind.
So the type of event's very important. And, if you want to know which of events are highly anticipated every single day, then you really don't need to go much further than the terminal because we provide that info every day in the terminal, in our daily risk event outlook report.
So these daily risk event outlook reports, it'll show you whether there are any very important events coming up and we'll prepare you on which things to look for and which things to expect from these events.
Of course, we also run through them through the day in our video commentary, as well as the daily video webinars.
Now, what about those events that might be market moving, but they are not expected to move the market. So, as traders, like the CPI's we had today, as traders we need to be aware of these upcoming upcoming events, during the day and how they might impact the markets, even if we don't think it's gonna have a massive impact, we need to be prepared in the case that it does have an impact, coming in with a very huge deviation.
So in the example of retail sells, it's not like we expected the numbers to come in way above the market's maximum expectations, right? We didn't expect it to print at these massive numbers. There was no way of knowing how the data will come in ahead of time. But rather the important thing is that we were prepared for it, if it did happen. So always be prepared and have a game plan, in case it does deviate substantially.
The second variable to consider apart from the type of event is the type of trade that you're taking. So whether it's a scalp and intraday trade, where they'd say swing trade, if it's a swing trade, then waiting for the important event might be good, if the event has the potential to change your entire macro fundamental bias, like a central bank meeting.
But if it's a data point that might not, it might cause some volatility, but it won't necessarily change the overall buyers like today's CPI events, for example, in this current context, these ones shouldn't have been a game changer for you to take a swing trade, for example. If it's a day trade again it's gonna come down to the type of event that you're trading, when you're facing major events, rather keep your powder dry.
So apart from just the scheduled events, we'll also go through the potential unscheduled events that we need to watch out for. That can obviously also be important on whether you should or shouldn't take any trades.
So it's always just be mindful of those variables. What type of events are coming up, what type of trade you're looking to trade. And that should give you an idea of whether it's good to rather stay out of the market or close a trade before you reach or head into those economic data points or main events like a central bank meeting.
So I hope that helps with your question Tumelo. It really does come down to you to those two variables. But if there's any other questions, please don't hesitate to let us know.
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There’s a link below were you can learn more about it
https://bit.ly/2HFykNd
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We interpret and explain price moves in real-time, 24 hours a day. Our team of analysts produce text, video and audio commentary.
You understand the markets and trade with confidence. Learn more at our website here: https://bit.ly/2HFykNd
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The answer is a little bit tricky because it really does depend on a couple of variables, two actually.
The first one is what type of event you are waiting for. So if it's just a low expectation event, something like, in today's session was a good example, we had CPI for three major economies. We had CPI for the UK, the EU as well as the XAG but given the current sentiment, these were really low expectation events in terms of the outcomes. So if it's these types of low expectation events, then you could consider taking a trade in the morning, maybe even before the event, if it's scheduled in the afternoon.
However, if it's a highly anticipated and more important event, like a very important central bank meeting or highly anticipated economic data point, then you're probably gonna be better off waiting for the event to play out before you take a trade, unless of course you are planning to trade into the event, but if that is the case, then arguably you would have already been in the trade way before that.
Also keep in mind that U.S. data will of course be important for all the currencies because the dollar is so important, major events for the U.S. might affect something like the Aussie Yen, for example, if it's a good enough, if it has a big enough impact in terms of the overall risk flow. So definitely something just to keep in mind.
So the type of event's very important. And, if you want to know which of events are highly anticipated every single day, then you really don't need to go much further than the terminal because we provide that info every day in the terminal, in our daily risk event outlook report.
So these daily risk event outlook reports, it'll show you whether there are any very important events coming up and we'll prepare you on which things to look for and which things to expect from these events.
Of course, we also run through them through the day in our video commentary, as well as the daily video webinars.
Now, what about those events that might be market moving, but they are not expected to move the market. So, as traders, like the CPI's we had today, as traders we need to be aware of these upcoming upcoming events, during the day and how they might impact the markets, even if we don't think it's gonna have a massive impact, we need to be prepared in the case that it does have an impact, coming in with a very huge deviation.
So in the example of retail sells, it's not like we expected the numbers to come in way above the market's maximum expectations, right? We didn't expect it to print at these massive numbers. There was no way of knowing how the data will come in ahead of time. But rather the important thing is that we were prepared for it, if it did happen. So always be prepared and have a game plan, in case it does deviate substantially.
The second variable to consider apart from the type of event is the type of trade that you're taking. So whether it's a scalp and intraday trade, where they'd say swing trade, if it's a swing trade, then waiting for the important event might be good, if the event has the potential to change your entire macro fundamental bias, like a central bank meeting.
But if it's a data point that might not, it might cause some volatility, but it won't necessarily change the overall buyers like today's CPI events, for example, in this current context, these ones shouldn't have been a game changer for you to take a swing trade, for example. If it's a day trade again it's gonna come down to the type of event that you're trading, when you're facing major events, rather keep your powder dry.
So apart from just the scheduled events, we'll also go through the potential unscheduled events that we need to watch out for. That can obviously also be important on whether you should or shouldn't take any trades.
So it's always just be mindful of those variables. What type of events are coming up, what type of trade you're looking to trade. And that should give you an idea of whether it's good to rather stay out of the market or close a trade before you reach or head into those economic data points or main events like a central bank meeting.
So I hope that helps with your question Tumelo. It really does come down to you to those two variables. But if there's any other questions, please don't hesitate to let us know.
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If you find this content helpful, you’ll love Forex Source.
There’s a link below were you can learn more about it
https://bit.ly/2HFykNd
