Most often we get inquiries on this question: "what are the best tools for news trading" and "what are the best trading systems (EAs) for news trading". In order to proffer answers to these questions, I try to find out what actually these traders want. I discovered the following needs are major in the list:
- Consistent Profit, Consistent Profit, Consistent Profit...... (not entirely possible)
- Ability to trade every news event, without a loss (not entirely possible)
- Super intelligent system that will beat the market at its game (possible but not all the time)
Based on my experience in news trading I came up with what I call the basics and essential tools that would aid and improve a high-win rate in news trading. The combination of these tools does not make it a perfect system (holy grail) although it can get close to it depending on the knowledge and skills of the user. It is therefore extremely necessary to work on yourself because a perfect system with an imperfect user will always produce an inefficient result.
Lets start with the essential basics and then we proceed to the tools....
BASICS
- YouThe greatest tool in Forex trading is YOU. You are what you know and the more good knowledge you know about Forex the more successful you'll become. Knowledge they say is Power. You MUST acquire deep knowledge about Forex not just buying and selling but the underlying tricks, intrigues, secrets, both technical and fundamental principles of news trading.See: How I Trade The News (Beginners & Advanced Knowledge) - Part 1, Part 2 & Part 3
Based on my interview with some traders I noticed that what they actually need is just a little bit of indepth knowledge added to the trading systems they've acquired then they'll excel and reduce the consistent losses. In some cases many got frustrated, and backed out of news trading too soon.
See: Popular issues and complaints traders' make about news trading & where they got it wrong - Computer SystemThe area of focus here is not just the kind or specs of the computer system although its really important we use the best computing resources in trading Forex (a CPU of 2GHz & 2GB RAM upwards is suitable). The area of focus here is the right data connection (speed and reliability). Most news release comes with very swift reactions that are capable of sending price feed servers to go nuts. In some cases news data source comes in late after the action has occurred due to the insufficient capacity of the computing resources, and data connection reliability to pull down data from them. In this case a VPS is a great tool for 100% efficiency in news trading due to their massive resources, and robust hardware architecture.
See: Reasons Why You Might Need A VPS Service - BrokerThis is another very important area where many traders get so confused and frustrated. We receive lots of inquiries like "which broker is the best for news trading?" or "where can I get a broker without slippages, requotes and low spreads?" The answer is you might not get a 100% perfect kind of Broker but at least you can truly get something close it. A common mistake most traders make in news trading that leads to slippages is when they try to manually place an order few seconds to a news release. The chances of getting slippages becomes very high due to the huge demand and super speed (surge) of price from liquidity providers all over the world at split of seconds. Even intelligent auto click EAs sometimes fail in this scenario. However the following considerations are important when it comes to news trading and Brokers.
- AccountNot all account types are recommended for news trading. An ECN account or an STP Broker with either currenex or related account of such type is preferable. Using a mini or micro account with an insignificant balance might be disastrous for news trading, except you want to trade with mini lots of 0.01, which might be unprofitable at the short run. Some Brokers have dedicated accounts for news trading.
- CapitalDoes the amount of capital required for news trading matter? Yes! but with disciplined money management rules a little amount can swell up to a large ocean in due time. Honestly it will be gambling to start with a minimal sum of $100 for news trading. The kind of volatility here might crush it to bits in only one event if something goes wrong. This is worse for new beginners. Most traders misunderstand the word from Brokers - "Minimum Deposit" as to mean recommended capital for trading Forex. Hence they jump in with the minimum (a little amount), and then get fried at an early stage.
See: HotForex Zero Spread Account (specially designed for News Trading & Scalping EAs)
- Certain account types are protected from unusual spread widening. However from close observations, there are certain events that these special accounts cannot totally control when it comes to spread widening. For example events like Interest Rates, & Employment Change that requires pairing of CHF, AUD, CAD & NZD, spreads often widen beyond what we consider as the normal range in few seconds to the news release and then retract back. This calls for wisdom, and good skills to control and take advantage of it.
ESSENTIAL TOOLS
We decided to state a few important info about the basics before looking at the tools because the basics acts as a solid foundation which will make you enjoy full benefits of the essential tools.
Tool No 1. [News Feed Utilities]
You might be wondering why the EAs and Indicators didn't come up as the first essential tool. Without the news feed systems EAs or manual news trading systems are useless. Infact news feeds are a crucial feature in automated news trading system. So what's the ideal tool for this? They must be fast, lightweight, possibly affordable, portable, & accessible with ease.
FXPulse4: This FREE utility eases the monitoring of news release outcome directly on your chart. You do not need to flip back & forth from your platform and browser to see the actual figures for the news release as it comes directly on your chart. The utility can be customized to suit all kinds of events. Download: FXPulse 4.0
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