Trading the News: Euro falls by 200 pips

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Posted by on Saturday September 10, 2011 15:48:39:

It happened yesterday, on Friday as news of resignation of the ECB chief economist Jurgen Stark and this sent the Euro which was already priced low against major currencies like the USD on a continued fall.

The euro was already weakening towards the end of the week and traders expected it to continue till weekend but as more bad news came out, it just took a nosedive by more than 200 points on Friday alone. It was not exactly expected to go so low at that but since most traders were already on sell mode, it only encouraged more short selling. From an already low 1.39 against the USD, the Euro by the end of Friday had already touched $1.36

Who knows what Monday will bring with the Euro already priced so low?

Now this was a funny day and I had luckily closed my Long trade by early morning while looking for the next trend. Traders who went on Four hr short selling must have seen gained a lot of green pips while others who were hoping for a rebounce and probably didn't get the memo were wallowing in greens. Naturally, Fridays are mostly favourable for short selling and we just have to hope for the best by the coming week

Trading news such as this would require having reliable and constantly updated news sources. Using economic calendars alone just don't give the complete news as those ones are already anticipated but who even know that Stark would be resigning.

The most important thing with trading the news is not just to follow the news but also to follow the trend. You need to set up your charts and monitor the buying and selling strength before deciding on a position to take. The market on Friday was definitely trending bearishly and wouldn't have made sense if one was just buying except for scraps and quick profit.

Now imagine what 200 pips would have done for many? Assuming you gain $10 per pip, then 200 pips would have given you a cool $2000.