Scalping the News Breakouts

On December 7, 2010 | By | In Scalping Pattern

Pattern Scalping Strategy

There are different price patterns in the trade markets; scalpers who prefer calmer markets use to exploit formations like triangles and flags, while scalpers who prefer trading the news tend to be active during breakouts.

The new releases play a very important role in any trading day as the most important and common breakouts are caused by them, no matter about their nature. The causes of the volatility can be various as for example an announcement from the government, an unexpected result of a report, or a military attack anywhere in the world. When this happens it can be detected a rapid rise in the volatility, it will last for hours leaving behind swings and fluctuations then exploited by scalpers.

This kind of scalping is similar to the fundamental one and it has nothing to do with the real nature of the news releases, they can interpret the information but they should be ready to respond to an unexpected reaction of the society.

Once that a news is released (about 8 am) the market react with a rapidly increasing behavior that don’t give traders the chance to look back. In the moments after the release, and in the preceding ones, spreads use to widen significantly and the opportunities that scalpers could fine are almost inexistent. Ten minutes after the release, scalpers can find favorable conditions.

The main rule while scalping a news breakout is to avoid the short period around the new releases itself, what means not to trade in the 10 minutes before and after the release. This period is very chaotic and could be only traded with automated tools for scalping; instead, it could be a great opportunity for good traders to interpret the direction where market could go.

We can add a time-stop to a scalping position, which is a kind of stop order once that the traders reach a detailed period of time; they don’t want to be exposed to the market for a long period and to avoid it they can establish a time-stop for example after two minutes.  The longer they expose to the market, the higher possibilities of being hit by a sudden risk or movement against our predictions.

Scalping of news breakouts can be very profitable, because all the ideal conditions required by scalpers are present. The swift, large, moves which are present in the brief timeframe during which scalpers are willing to expose themselves to the market, allow the formulation of profitable forex scalping strategies.

One Response to “Scalping the News Breakouts”

  1. Nannie Stover says:

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