How to Trade around a News Event (Thread)
Reacting to and trading based on a news event can be broken down into three parts:
1. Pre-market trading (observation)
2. News embargo lift (observation)
3. IPDA macro (action)
1. Pre-market trading (observation)
2. News embargo lift (observation)
3. IPDA macro (action)
Step One: Pre-Market Observation
1) It is not important to understand the news event data itself, but how we react to its movement.
During the release of a news event, we can expect candlesticks to move faster and larger.
1) It is not important to understand the news event data itself, but how we react to its movement.
During the release of a news event, we can expect candlesticks to move faster and larger.
2) What might the news event be trying to achieve as an objective?
Price can do the following as an objective:
Expand above or below a liquidity pool.
- Overreach that liquidity pool into an imbalance.
Reach into a BISI or SIBI.
- Hunt liquidity within the BISI or SIBI.
Price can do the following as an objective:
Expand above or below a liquidity pool.
- Overreach that liquidity pool into an imbalance.
Reach into a BISI or SIBI.
- Hunt liquidity within the BISI or SIBI.
Mindset for the News Embargo Lift:
Only observe, then react.
Don't predict anything; relax.
Where might price want to go as an objective on the news release?
Only observe, then react.
Don't predict anything; relax.
Where might price want to go as an objective on the news release?
Step Two: News Embargo Lift
1) What happened pre-market prior to the News Embargo Lift
A) Did we maintain a price range and build liquidity above and below?
B) Did we create a greater discount/premium?
-If so, project where that discount/premium may end with swing projections.
1) What happened pre-market prior to the News Embargo Lift
A) Did we maintain a price range and build liquidity above and below?
B) Did we create a greater discount/premium?
-If so, project where that discount/premium may end with swing projections.
2) The News Embargo Lift
Observe the following:
What did the news event cause?
How much movement occurred in the market?
How quickly did it move towards the objective?
Observe the following:
What did the news event cause?
How much movement occurred in the market?
How quickly did it move towards the objective?
Step Three: Action
Based on the observation, take action as follows:
a) Do nothing if there is no A+ setup.
This builds trading discipline.
b) Wait patiently for the price to hit an objective.
The price will use the volatility injection to meet an objective.
Based on the observation, take action as follows:
a) Do nothing if there is no A+ setup.
This builds trading discipline.
b) Wait patiently for the price to hit an objective.
The price will use the volatility injection to meet an objective.
c) Fade the news with the IPDA macro at 9:30.
At an IPDA macro, the price can shift the sentiment by engineering liquidity into the market.
At an IPDA macro, the price can shift the sentiment by engineering liquidity into the market.
Market Maker Sell Model Completed 🤝
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Also, for more case studies and interbank insights, check out my website at
BraveheartTrading.com
Also, for more case studies and interbank insights, check out my website at
BraveheartTrading.com
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