bull and bear side of the trade. Since the probability of a profitable long or short trade is around 50 during 90 of the day (the market is in a strong breakout during the other 10 of the time, and the probability can be 70 or more during those brief times there. The last thing you want is to wake up to a trade in the red by 7 due to an unscheduled event such as a natural disaster of some kind. Trading a Higher Time Frame Allows the Market to Settle Another simple but extremely powerful advantage of using the higher time frame to cope with news events is that it allows the market to settle. . I was convinced that the lower time frames held the real money in the Forex market. The only time youre completely free of bias is when you have no trades on the table. In this article Ill discuss a few ways which can help the price action trader deal with news events.
Bulls will scale into longs in the lower half of the range and scalp out with profits in the top half. Trade management is more important than picking buy and sell signals. It creates a buffer between your stop loss and price It allows the market to settle after a news event The Buffer It sounds like an advert for a cleaning toolbut it isnt. It is okay to not trade the final hour. I then structure and manage my trades by using appropriate protective stops and profit targets. This is mostly the case because as traders, we feel that the more trades we take the more money we can make. Have you ever entered a trade on a lower time frame just before a news event and watched the market stop you out and then take off in the intended direction five minutes later? But thats what I love about using price action on the higher time frames its a simple solution to a complex challenge faced by many technical traders. Why is price action trading so powerful? How do we effectively trade the resulting price action while protecting ourselves from the volatility of news events? This is of course the way I like to do things and I realize it wont translate for everyone, and thats okay.