Chart technique and trailing stops for profit protection

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It makes sense to look at an expected market reaction in the context of the market's chart condition and to include important marks in the chart in the implementation of the strategy. An example: Shortly before the publication of the US labour market data (non-farm payrolls), the S&P 500 is trading just below a double-tested resistance at 2120 points. If a surprisingly high number of new jobs is expected or "bets" on, a stop-buy order can be placed just above the resistance.

The chart technique can also provide indications for sensible exit levels. If a position develops negatively, it should be closed out quickly with a stop loss anyway - news with potential usually unfolds this quickly.

At the same time, rules for profit-taking offer themselves, since depending on the general market situation, the effect of a news item can quickly fade or be neutralised by another news item.

One possibility is to close a profitable news position in whole or in part when the market approaches resistance or support after the impulse. However, this carries the risk of missing part of the market movement. Trailing stops" are therefore an alternative to chart-based profit-taking.

News trading on the foreign exchange market

For the foreign exchange market, those news items are particularly interesting which, in the opinion of market participants in exness thailand, indicate changes in the interest rate level. These include direct or indirect statements by the central bank and indicators that allow conclusions to be drawn in the context of such statements.

Example: If the US Federal Reserve announces that it will raise the key interest rate if either the number of new jobs created in the next few months or the inflation rate rises significantly, this lends particular significance to news on price and labour market developments.

A risk (not limited to the foreign exchange market) in connection with two-track positions (stop-buy and stop-sell) is price gaps as a result of a publication. The price gaps that actually exist in the market can be significantly amplified by the broker's internal pricing, so that in the worst case a position is opened at significantly worse positions and the opposing position is closed with a large loss.

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If such distortions are to be expected, it is better to open two opposing positions before publication. The broker must allow this - some providers automatically offset offsetting positions. If the market moves upwards after publication, the short position is closed and vice versa.

The conclusion

Technically, there is no significant difference between news trading on the FX market and news trading with CFDs on other underlyings. The use of exchange-traded securities such as leverage certificates is also possible.