Market volatility may increase geometrically for press releases,

Before proceeding with anything, I like knowing exactly what I'm getting. The same applies to operations, especially. We have heard the benefits and why we should "operate the news", but more importantly we know the risks. Price Distortions Market volatility may increase geometrically for press releases, which means that the price can move from 5 pips to 20 pips (or even 50 pips or more in the main press releases), in seconds. If you try to complete your order for this kind of volatility, most likely with a price very different from what was anticipated. It is especially risky to limit entry orders. For example, once I put an order with a broker (one that guaranteed fixed differences, but not execution), 15 minutes before

an important press release on the EUR / USD. Just before that, the market was at 1.3320. I placed my order would reach the limit to 1.3360, with a gain level of 1.3383. The news was bad for the U.S. dollar, causing the market to fired 80 pips, as soon as the news published. My order was gone, but - unfortunately - I got up to 1.3390: 30 pips above my price limit! After the market stabilized for a while, my profit projection was performed by loss because he was ordered below the price reached. Fortunately, it was only a loss of 7 pips, but it was a lesson that cost me. Order Frozen Some runners prohibited limit and market orders, just before a major release (some for more than 30 minutes to an hour before). This usually occurs with the brokers that guarantee fixed differences. The reason that your trading platform "shuts down" because the platform is not "collapse" but because the gap is too wide and if the offer riders with these differences, they would lose money. Volatility / Jerky During the new economic reports and publications, the market may range from 20 to 50 pips in a second! The volatility of the news can be very dangerous even for experienced investors. You can catch the strong initial momentum, but as has happened several times in these situations, this can quickly turn into a losing trade. Differences Some runners can ensure delivery, but no differences and, during recent events, will dramatically expanded differences (I have seen as a difference of 3 pips becomes one of 14 pips for a report). If you want to make small gains of 5 to 10 pips, it will affect their chances of profitability and may keep a potentially losing operation.

Tags: , , ,

Leave a Reply

Please note: Comment moderation is enabled and may delay your comment. There is no need to resubmit your comment.

Hide me
Sign up below to download FREE Day Trading Software!
Name Email
Show me