Trading on the reaction to the news is not as risky as the trade on forecast of the news. But it also has a smaller potential for profit. Instead of prediction of the news, the speculator simply monitors the news and opens a position only if the news diverges strongly with the forecast. So, such a trader cannot make a mistake, having predicted the news incorrectly. However, this strategy also has its dangers. After the announcement of news, which was surprising for the market, there are sharp price movements, and then slippage becomes inevitable. A trader catches the fleeing price – there is always the risk that he must buy at the top or sell at the bottom.

An assumption which underlies this tactics – is prolongation of price movement. The price should proceed the movement in a given direction so that a trader will be able to make a profit. Since the basic price adjustments often happen at the very moment of the announcement of news, very often only dribs and drabs are left for such a speculator. That is why the traders trading on the reaction should remember the recommendation of Baron Rothschild. When he was asked how he succeeded to become so rich Rothschild replied: “Because I always derive a profit fast. Likewise, when using such strategies, it is necessary as fast as possible to fix profits. In such situations the major enemy of the trader becomes greed.

If trading on the prediction is too volatile, and the opportunities to trade after the publication of news are limited, is there a better method of trading in perilous events? Yes, there is such a method. Solution is a simple combination of two techniques, which was realized by Jessie Livermur.

Jesse Livermur is one of the greatest traders of all time. He is known as an adherent of “projected” approach to the trade. Instead of placing the entire position at once, Livermur first tested the market by placing small orders to verify the accuracy of his analysis. If the first bargain was profitable, he increased the amount of positions, exercising pyramiding of profit.

Livermur increased the volume of profitable but not loss-making positions. This method is directly opposite to tactics of most traders. Scaling of the position up instead of scaling down – is a prospective technique for control of the capital, as it allows to minimize losses and increase profits. However, the methodology of Livermur is very difficult to implement in practice since it demands that the speculator refuses from short-term income for potential greater long-term win. For the usual retailer there is nothing more unpleasant than watching as profit turns to loss that occurs quite often when using the technique of Livermur since the price often makes a pullback in the opposite direction, nullifying all the profits. That is why many traders are doing just the contrary to what experts of trading advice: they allow losses to grow and fix their profits too quickly.

Nowadays people are looking for additional or even primary sources of income as never. World economy is still in tough condition, and to get a well-paid job is not that easy task. And forex is one of the ways to make 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 get forex market news can make use 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.