News Trading Strategies: How Do You Capitalize on Market Events?

[kingdee3]

Share your approaches to trading around news events. Do you have specific strategies for trading economic announcements or geopolitical events?

 

[Fin_Trader]

Trading on the news is a game of roulette. How many times have I noticed that when, for example, positive news comes out on a certain currency, instead of growth it shows a sharp decline. Or it happens that sudden strong volatility arises and the price sharply goes up first, and then down by the same number of points, knocking out the stops of both buyers and sellers. Therefore, I try to trade in a calmer market, where the signals from my trading strategy are more often correct and provide the opportunity to earn more consistently.

 

[bestnour1116]

Economic Announcements​

1. Pre-Event Positioning:
   • Neutral: Close or reduce positions to avoid volatility.
   • Speculative: Position based on expected outcomes.
2. Options Strategies:
   • Straddle: Buy both call and put options for large movements.
   • Strangle: Buy out-of-the-money call and put options for cost-effective hedging.
3. Reaction Trading:
   • Breakout: Trade in the direction of a breakout post-announcement.
   • Fade Reaction: Trade against initial overreactions.

Geopolitical Events​

1. Risk Management:
   • Hedging: Use options or futures.
   • Diversification: Spread investments across different assets.
2. Safe Haven Assets:
   • Invest in gold, Swiss franc, or US Treasuries.
3. Correlation Analysis:
   • Trade assets with known correlations to geopolitical events.