While the novices jump at the chance of trading during heightened volatility, the experts wait for the conditions to be just right before they open a position to make money online. The latter group makes more money. So whose advice would you follow?
Trading the news doesn’t necessarily mean that you should jump right in after a release. Once the market has violently moved in any direction you may see a currency go sideways; other times it may reverse and establish a clear-cut pattern. Either way, you should observe patiently for the right time to open a trade.
If you’re caught in a fake out, don’t remain in the position hoping it eventually goes the way you want. Exit as soon as possible so that your losses are not big.
While all this is taking place, you ought to be studying the charts. Using swing charts may prevent you from making a costly mistake. As you may know, one of the multiple uses of swing charts is to avert false breakouts or movements that won’t bring you gains.
When you trade after a news event, you’ll want to have a number of factors indicating trade possibilities. You may want to look for candlestick patterns such as a hammer displaying a big shadow at the highest high or the lowest low. Implement Fibonacci retracements on a 200 SMA to spot convergences. If you see a candle developing at such place, grab a few pips off the bounce.