Preemptive tactics can bring big profits, however it is risky. Predicting the news, a speculator can get a permanent profit, if his analysis proves to be right, and if he can forecast the market reaction to the news. However, if a trader makes a mistake and opened a position in the incorrect direction, he may suffer large losses. Thus, I can recommend two main rules of the work to these traders. First, you must always trade with tight stops. Though the use of the stop does not guarantee that it will be executed, it will allow you to lower the likelihood of catastrophic impact of errors on your deposit, as the loss-making positions should be closed as soon as possible.

As a rule, traders who use preemptive strategies open position for 5 or 10 minutes prior to the publication of news by posting the stop at 20 points. Opening position for a few minutes before the news leads to the fact that it does not influence the “pre-news” volatility. Sometimes, this volatility fosters the trader if the price movement occurs in the expected direction till the announcement of news, because speculators often deceive the market prior to the publication of news. Nevertheless, too much early opening of the position could lead to operation of the stop even prior to the news was published. It is best to open a deal just prior to the publication of news.

Those who wish to try this tactic should remember that the spread between the bid and ask before publishing of news often grows. Typically the stop at 20 points is enough to ensure your living space even in the face of enlargement of the spread, but when trading on such not very liquid pairs as the Australian dollar / US dollar (AUD / USD) or the New Zealand dollar / US dollar (NZD / USD) spreads can be very big. As a result, the position may be closed prior to the news even if the player was able to analyze rightly the situation on the market and predict the price movement on the news. Unfortunately, this is one of the major risks of using such strategies. Prior to the use of such tactics, we would advise you to check the possibility of trading platforms by setting a series of small transactions on news releases in real life to see how the platforms operate in real market conditions.

The second most significant rule of preemptive strategies: it is necessary to close the transaction quickly if the news release did not confirm your analysis. Remember: the key point of such strategies lies in the prediction of surprises. Thus, if the news is opposite to your expectations or simply corresponds to the consensus prediction, you have to close your position urgently, even if the stop did not work. A lot of traders are just sitting and waiting, whether the price moves in their direction. However, this tactic of “waiting animal” can cost you dearly enough. In most cases, the price will go against you, if it has not received the corresponding pulse from the news.

Currently people are looking for additional or even primary sources of income as never. World economy is still in tough condition, and to find a well-paid job is quite hard. And forex is one of the ways to earn some money. To trade successfully one needs to know events on the market, so forex news is of great help here. Those who don’t know where to receive forex market news can take advantage of the Internet. Just type “forex news trading“, for example, in Google or other search engine and you will get many news sources to choose from.