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Originally Posted by clearsight
I just tried a strategy where I went long and short(hedged) gpd/usd at 1.9735 and when the news broke I cut the long at 1.9716 (that's where it popped to) and then kept the short open and closed at 1.9700. Not much of a profit but it was a decent return on an investment of 20 minutes...if it was three round lots instead of one mini lot....small steps. Still I guess it is risky guessing when to cut the losing side...wait this is forex, of course it's risky. Silly me.
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That's an interesting strategy, but of course it implies that you expect markets to retrace their post-news move. I know of at least one trader who would make it a habit to fade post-news rallies or drops on big events, and I can tell you that it was a very high risk/high reward strategy.
Depending on the news release and the actual results, it could be dangerous trading against the initial move. As the writer of our daily "Trading the News" report (available on DailyFX+), I can tell you that trading
in the direction of the initial move can be a solid scalping strategy.
As I wrote in one of my posts above, you assume relatively little risk when you trade certain news events. If markets move significantly against you, your position is closed at a small loss. At the same time, strong post-news extension can often bring bigger profits.
Does anyone want to share experiences of successful post-news trading strategies?
