Using the Double in a Day EA to trade announcements
One of the most successful trading techniques to double your account in a day is the Forex Announcements straddle. Below are some ideas on how use announcements to double your Forex account a number of times a month.
Be aware of volatility. We are looking for announcements that will really move. One of the best indicators of potential volatility is when the Multiple Moving averages consolidate to the point where all the colours merge. Essentially this means that there is a high level of uncertainty in the market and the smallest amount of news will create a strong market move. These consolidations should ideally occur on the 1 hour, 4 hour and daily charts at the same time. If the Daily is not completely consolidated it is not serious but try to trade when the at least the 1 hour and 4 hour charts are.
Be aware of market behaviour. One the whole announcements in the Asian and European markets do not whipsaw with false breaks as the ones in the US sessions. So prefer Asian and European announcements to the US ones if you can.
Trade the appropriate currency that will provide the best volatility during the announcement. If it is a UK announcement don’t automatically trade the GBPUSD. Consider other crosses that maybe more volatile such as the GBPAUD or GBPJPY.
Take the short term market volatility into account. If there is virtually no price action do a tight straddle. If there is some movements do a bigger straddle. By this we mean that if there is little price action a 10 to 15 pips straddle maybe enough but if there is some volatility or it is a US straddle use 15 to 25 pips as your straddle distance. So you would put a buy and a sell pending order +/- that distance from the price a few minute before the announcement.
Know your broker. Some broker widden the spreads considerably during important announcements. This could result in you being entered and stopped out very quickly and make it almost impossible to trade announcements.
Experiment to find a Double in a Day strategy and a Straddle strategy you are comfortable with. Some traders use 2 buy and 2 sell pending orders. So if the first one gets stopped out a second will activate and have a chance of success. So they would place a sell pending order say 20 pips from the price with a 15 pip stop. They would the place a second sell pending order at the stop of the first pending order so that if the first is stopped out the second will activate. This strategy is mainly use when a whipsaw is expected in the US market.
Announcement volatility tends to be strong in the first 5 to 15 minutes of the announcement. When designing your Double in a Day strategy consider topping up as soon as your strategy will allow. So topping up at 30% and 50% is better than at 50% and 70%.
Know your odds. If you are risking 5% to make 100% it means you can get more or less 19 of these trades wrong and only 1 right and still be profitable. Knowing this often helps if you become dispondent after a failure or 2.
Practice. Practise. Practise. Do live or demo trading at every trading opportunity that presents itself. This is the only way you are going to become your own Expert at trading Announcements using the Double in a Day EA.
You can get more information on Announcement trading from this website. http://www.currencynewstrading.com/ If subscribe to you can get a daily update of important announcements and strategies.
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