I recognise a lot of this write up from the "Trading The News" chapter of The Art of Currency Trading.
I was never great at trading news events until I read it. It bridged a lot of gaps in my knowledge and has made me a shit ton of money relative to where I used to be. It paid for the AM/FX subscription (many times over...). Obviously I highly recommend the book and the subscription.
I'd like to zoom in on the hypothetical sell ES around 4075 post CPI number in September. The reason I want to do that is because I had prepped perfectly for that event, the market behaved pretty much as I expected (see this twitter thread I did on it: https://twitter.com/frenchdna/status/1569679823911669767), my instrument of choice was EURUSD but the trade idea was very similar. The issue I have to this day with trades like this is what you highlight: "It’s never an easy trade selling something down 100 handles, and this is only easy in hindsight." Meaning I can sell very little size blind as soon as humanly possible and not care much because the size is so small. But if I want to put on more size then the variations and wild spread of the first few seconds make it really complicated (I approach this from a retail trading perspective with leverage involved, I have reasons to believe my broker sends my flow to LMAX). Besides, if the market has moved so much so quickly your SL has to be stupidly wide. In this case I put on a lot of size, probably too much, and didn't manage the trade too well.
In your example of selling at 4075, where would you place the SL? At the very high around 4170-4175?
This is an area where I believe I have edge but my execution isn't optimal, I'm leaving a lot of money on the table. I'd like to get better. I'd love any feedback here from more experienced traders on how to handle such events.
As for the aftermath of the CPI number tomorrow, I'm with you Brent. I think we're due for a little USD dip. Current plan is something like this:
- IF strong US CPI number AND USD rally AND the rally fails and turns around THEN sell USD with conviction
- IF strong number AND USD holds/follows through THEN it wasn't my trade, stay flat and reassess the thesis
- IF meh number THEN probably sell USD but wait for market confirmation first, don't go in blind
Great advice in this article! Thanks. Do you know any book or resource where one can dig deeper into the concept of priced-in and techniques for (quantitatively) gauging what is priced-in the market in relation to various asset classes?
This trade is not for me but it sure was fun reading. Thanks
Good article but a really strange choice of trade. Super illiquid .And no chance to take advantage of any move pre 9:30
Amazing educational article. You make great content
Thanks you!
I'd usually stay out of trading events due to the "cyborg" problem such as you mentioned but only now have I known there's more strategies in use.
Thank you for another great piece!
I recognise a lot of this write up from the "Trading The News" chapter of The Art of Currency Trading.
I was never great at trading news events until I read it. It bridged a lot of gaps in my knowledge and has made me a shit ton of money relative to where I used to be. It paid for the AM/FX subscription (many times over...). Obviously I highly recommend the book and the subscription.
I'd like to zoom in on the hypothetical sell ES around 4075 post CPI number in September. The reason I want to do that is because I had prepped perfectly for that event, the market behaved pretty much as I expected (see this twitter thread I did on it: https://twitter.com/frenchdna/status/1569679823911669767), my instrument of choice was EURUSD but the trade idea was very similar. The issue I have to this day with trades like this is what you highlight: "It’s never an easy trade selling something down 100 handles, and this is only easy in hindsight." Meaning I can sell very little size blind as soon as humanly possible and not care much because the size is so small. But if I want to put on more size then the variations and wild spread of the first few seconds make it really complicated (I approach this from a retail trading perspective with leverage involved, I have reasons to believe my broker sends my flow to LMAX). Besides, if the market has moved so much so quickly your SL has to be stupidly wide. In this case I put on a lot of size, probably too much, and didn't manage the trade too well.
In your example of selling at 4075, where would you place the SL? At the very high around 4170-4175?
This is an area where I believe I have edge but my execution isn't optimal, I'm leaving a lot of money on the table. I'd like to get better. I'd love any feedback here from more experienced traders on how to handle such events.
As for the aftermath of the CPI number tomorrow, I'm with you Brent. I think we're due for a little USD dip. Current plan is something like this:
- IF strong US CPI number AND USD rally AND the rally fails and turns around THEN sell USD with conviction
- IF strong number AND USD holds/follows through THEN it wasn't my trade, stay flat and reassess the thesis
- IF meh number THEN probably sell USD but wait for market confirmation first, don't go in blind
- IF number weak THEN sell USD.
Good lessons. Thanks
Great advice in this article! Thanks. Do you know any book or resource where one can dig deeper into the concept of priced-in and techniques for (quantitatively) gauging what is priced-in the market in relation to various asset classes?
great read
Yep this was a great one. The others to but this one even more than usual. Liked the read!