I've always put extra attention to news release no matter how the expected impact would be.Referrring to the news release by forex factory, the red news come with the most impact, the orange is medium whereas the yellow is the least impact.
What you see above is the orange category news release at 4.30pm local time for UK GDP Data last Friday, 23rd Oct 2009. Though the deviaton is not that significant from my perspective, the impact was devastating, taking down 300 pips from the moment the news release until later that night beyond London close.
See, the point here, I had a few trading colleagues who were eaten alive due to this news. There were cruising long when the price started coming up that afternoon from 1.6625 up till 1.6693 before the tsunami attacked suddenly at 4.30pm.
As for me, I was going short base on my technical analysis at 1.6625 that afternoon and set my stops at 100 pips away, at 1.6725. Fortunately I was away from my station when the price suddenly hiked to 1.6685 in which I knew this while checking the price on the move. If I was around, I would have closed my trade already in oder to limit the damage. Hence, I thought it's a lost trade already since I have no way of controlling them due to being away from my trading station. So I just closed the trading webs from my iphone and just return to home as usual that evening at around 5.30pm...
Later when I went up to my station to see if there could be any new trading setup for other pairs, to my surprise it was indeed a winning trade with 160 pips plus already showed up on my screen... jumping up and down, I straight away closed the position without thinking twice at +157 pips in the bank... great! I thought for a while since it's already a bonus to capture such a nice return for something that I earlier thought as a loss already...
This is another point, later I realize that due to sudden adrenaline rush of seeing such a big win, I could have hold that position even longer by putting my stops to +100, and +150 accordingly instead of closing it immediately. Why? Because the price never return and it keep on going down to 300 pips level from my entry until later that night before the market closed on Saturday morning.
Though I am thankful for the winning trade, I knew I could have done better in such situation, if I were in control especially when the market was on my side. Anyway, still a good trade from the whole perspective.
Back to the news matter, as you coud have read somewhere else, do not presume what the impact would be.
This is just one nice example of how news could move the market beyond your wildest imagination.
For now, I am waiting and expecting some correction on the EUR/USD pair... I could see that the bulls are a bit running out of steam already. The overall trend is undeniably up... but certainly technical corrections do need to happen in order to balance the supply and demand. The question is only when? Perhaps next week prior to the NFP on Friday... we'll see...
Have A Nice Trading Week...
;)
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