You’ve probably heard the words “3 bull news” on many of my YouTube videos. You might be even tired of me hearing that you need to avoid 3 bull news in order to make money with day Trading. The truth is that over the past 3-4 years I haven’t made more than 1 video in regards to this topic. Well, here I am with a deeper, and probably the last explanation that you will need in regards to 3 Bull News, and why is it that I always tell you that you must avoid them.
I want to clarify that I recommend you to watch the below video, as I give a lot more details in it in regards to this topic. In this specific blog-post I will provide with a recap of what I covered on that article, but the real content and the full explanation is on the video. I might even skip (unintentionally) some important parts in regards to it, so again, better to watch the entire video. Here it is:
What are the Economic News?
As you know, when we trade Forex we mostly invest on the movement in pricing on different currency pairs, such as Euro, US Dollar, Canadian Dollar, etc. The Economic Calendar, which can be found here: www.investing.com/economic-calendar/ is the one that keep traders and speculators informed in regards to different events regarding global currencies, crypto currencies, stocks and even commodities. So to sum up, if anything happens with any currency in the world, the Economic News will show it to us.
These news can affect the market in a very powerful way. We’ve seen that during high impact news the prices on certain currencies suddenly spike, or suddenly fall down without a reasonable explanation. This usually happens during HIGH VOLATILITY, which is determined by the number of stars on the currency that is being affected. See the image below as an example.
Notice that on the image, there are currency pairs with 1 Star (Low Volatility Expected), 2 Stars (Medium Volatility Expected) and 3 Stars (High Volatility Expected). These are the events that represent the movements in those currencies at the time that the news are taking place. The news that I recommend you to avoid are the ones with 3 Stars.
What to do to avoid Losing Money with the Economic News?
Very simple: Avoid trading within 1 hour before, and 1 hour after the High Volatility Expected (3 Stars) on that currency. You can keep trading with other currency, but not the one that is being affected by the news. By doing that, you will be lowering the risk of unexpected movement in your trades.
The larger the period on the candlesticks that you use, the less risk to be affected by the news. This means that if you trade with 5 to 1 hour candles, you are most likely to be affected by any news that occur during your trading session. While if you trade with 4H, or even better, 1D candlesticks, news won’t affect almost nothing your trading session.
I hope this article help you, and happy trading!