News will tell you When to Trade (Economic Roadmap) - Ep 25
Summary
TLDRThe video discusses how traders can use the economic calendar as a roadmap to identify high-probability trading days. It emphasizes that price action and economic events must align for successful trades, particularly by leveraging news drivers that increase market volatility. The speaker explains how certain high-impact events like CPI, NFP, and FOMC should be approached with caution, while other economic data can help traders capitalize on volatility. By focusing on the right days, such as those with relevant news, traders can avoid low-volatility periods and increase their chances of success.
Takeaways
- 📅 The economic calendar serves as a roadmap for identifying days with high volatility and potential trading opportunities.
- 📊 Price action must align with the economic calendar for optimal trading conditions, especially around key news events.
- 💡 High-impact news events, like USD-related news for gold, bring volatility, which is necessary for profitable trades.
- ⚠️ Avoid trading before or during major events like FOMC, NFP, and CPI to prevent slippage and excessive risk.
- 🚫 Trading on news event days without waiting for volatility can lead to account losses due to unfavorable fills or slippage.
- 🧠 Day trading isn't about trading daily but knowing which days offer the highest probability for significant price movement.
- 📈 Gold trades are influenced by USD drivers, and other instruments like futures and Forex pairs react similarly based on the news.
- 📉 Monday's and Tuesday's volatility in price action often depends on the economic news released at the start of the week.
- 🧭 When price action and news are aligned, expect more stable and cleaner trades, with fewer chances of price consolidating.
- 🔍 Focus on pairs related to the currency affected by the news event, such as USD/CAD for Canadian dollar news.
Q & A
What is the importance of using the economic calendar when trading?
-The economic calendar helps traders identify which days are likely to see market expansion or consolidation, based on news drivers. It serves as a roadmap, allowing traders to know when price action and news are in agreement, which increases the probability of successful trades.
How do economic news drivers impact market volatility?
-Economic news drivers, especially high-impact ones, bring significant volatility to the market. This volatility is crucial for traders because it creates trading opportunities. Without volatility, price action becomes rangy or consolidates, making it harder to trade effectively.
What does it mean for price action to be 'in agreement' with the economic calendar?
-Price action is in agreement with the economic calendar when the price movement aligns with the expectations set by economic news events. For example, if the price is hovering above a discount array and a significant news event supports a move higher, the economic calendar and price action are in agreement, signaling a good trading opportunity.
Why is it important to avoid trading during major events like FOMC, NFP, and CPI?
-Trading during or just before major events like FOMC, NFP, and CPI can lead to slippage, where stop losses are not executed at the intended price, resulting in significant losses. The volatility during these events is unpredictable, and trading at these times can be considered gambling.
When is it safe to trade after major economic news releases like CPI or NFP?
-It is generally safer to trade after the news release, once the market has digested the information and volatility has stabilized. Trading five minutes after the news release, when a clear setup presents itself, can be a good strategy.
How do kill zones relate to trading and volatility?
-Kill zones are specific time periods during a trading session when the market is particularly volatile, which is useful for scalping trades on short timeframes like one-minute charts. However, kill zones alone do not guarantee daily market expansion, which is where the economic calendar plays a more critical role.
What are some examples of news drivers that affect gold prices?
-USD-related news drivers, such as the Empire State Manufacturing Index or other US dollar economic events, are significant for gold prices. Traders should focus on USD news when trading gold, as these events bring the necessary volatility for price expansion.
How can traders predict which days will see significant market movement?
-Traders can predict significant market movement by analyzing the economic calendar and looking for high-impact news events. If price action aligns with these events, such as being near a key price level on the same day as important news, the market is likely to expand.
What is the role of fair value gaps in the trading strategy described in the script?
-Fair value gaps are key price levels where traders expect the market to reverse or expand. These gaps are used in conjunction with the economic calendar to identify days when price may expand, especially when news drivers support the expected price movement.
What is meant by the phrase 'day trading means knowing exactly the days that you want to trade'?
-This phrase emphasizes that day trading is not about trading every single day, but rather selecting specific days when there is a high probability of market movement. These are the days when price action and the economic calendar are aligned, offering the best trading opportunities.
Outlines
📅 Using Economic Calendar as a Trading Roadmap
This paragraph explains the method of using the economic calendar as a roadmap for determining which day is best for trading. The focus is on aligning price action with economic news drivers to identify days with high probability for price expansion. The example provided uses gold, where the trader targets liquidity and fair value gaps. The key takeaway is to trade when the economic calendar and price action are in agreement, especially on days with relevant news impacting price movements.
⚠️ The Dangers of Trading During Major News Events
This paragraph warns about the risks of trading around major news events like FOMC, NFP, and CPI. It advises traders to avoid trading just before or during these events due to the high probability of slippage, where the stop loss might not be filled at the right price. Slippage can lead to significant losses, and thus it is recommended to only trade after these events when volatility stabilizes. Other high-impact news events, such as PMI and retail sales, are safer to trade before or after the news release.
📊 Understanding Volatility and News Drivers in Trading
Here, the importance of volatility in trading is emphasized, explaining that kill zones and economic news drivers are key to identifying when the market will move. The paragraph highlights how USD-related news can cause volatility in instruments tied to the US dollar, like gold and major forex pairs. It also explains the importance of aligning price action with news events, using an example of a high-impact news day where gold expanded higher based on US dollar news, demonstrating when volatility creates profitable trading opportunities.
🔍 The Key to Day Trading: Economic Calendar and Price Action
This paragraph focuses on the misconception that day trading means trading every day. It argues that successful day trading comes from identifying the specific days when the market is likely to expand, using the economic calendar. By understanding which days have high-impact news, traders can avoid trading on low-probability days. The example of gold and EUR/USD is used to show how price action and the economic calendar must be in agreement for a move to happen, offering insight into filtering days with the highest trading potential.
🚫 Avoiding Traps in Price Action with News Drivers
In this section, the importance of avoiding trades on days where price action lacks volatility is explained. The example of trading ES (S&P 500) shows how price action may intend to move higher but fails without economic calendar support. This emphasizes the need for both price action and news drivers to be in alignment to avoid getting stuck in price action that doesn't follow through. The paragraph also reinforces the point that looking at the economic calendar helps identify pairs or instruments that will move based on relevant news, reducing the chances of trading on low-probability days.
Mindmap
Keywords
💡Economic Calendar
💡Price Action
💡Volatility
💡Kill Zones
💡News Drivers
💡Fair Value Gap (FVG)
💡Consolidation
💡Slippage
💡FOMC, CPI, NFP
💡Scalping
Highlights
Using the economic calendar as a roadmap helps traders know when to expect market expansion and when to take trades.
Economic calendar and price action agreement is key to knowing when to trade, especially when hovering above a discount array with news supporting the trade.
News drivers, such as US dollar-related events, provide volatility in the market, which is crucial for effective trading.
Volatility is necessary for successful trading; without it, price action tends to consolidate and range.
Kill zones are used for scalping trades when traders need high volatility in short timeframes, such as one-minute trades.
To know which day a market will expand, traders should focus on the economic calendar for news drivers relevant to the asset they're trading.
Traders should be cautious around major news events like FOMC, NFP, and CPI, as they bring extreme volatility, and executing trades just before or during the event can lead to slippage.
Slippage occurs when an order is filled at a much worse price than expected, which is common during high-impact news events.
It is advisable to trade only after high-impact news events like CPI, NFP, and FOMC, not just before or during them, to avoid slippage and major losses.
Price action and economic calendar alignment gives traders an edge, as they can filter out low-probability days and focus on high-probability setups.
Knowing exactly which days to trade based on economic calendar and price action is essential for long-term success and reduces unnecessary risk.
The economic calendar also helps identify which pairs or instruments are likely to be volatile based on specific currency news, such as USD, CAD, or EUR.
The volatility caused by news events is often priced in by institutions, who use it as an excuse to move the market, so traders should be prepared.
Avoid trading days where price action fails to follow through due to lack of volatility, as seen when Monday didn’t expand higher due to an inactive economic calendar.
The roadmap provided by the economic calendar allows traders to know in advance when the high or low of the week will likely occur and on which days major price movements will happen.
Transcripts
there is a method on how we can know
which day will expand and on which day
we should be taking trades that is when
you use the economic calendar as your
roadmap so using news drivers as your
roadmap I will go over exactly how I use
it and how I know which day of the week
I want to get involved which they will
likely be in consolidation and which day
will likely have highest probability of
expending higher or going lower so using
the news or the economic calendar as
your roadmap that is what very often
gets set but again this is so vague what
do you actually mean what does that mean
let me give you the definition first and
afterwards I'll explain it in depth
using the economic calendar as your
roadmap is when the economic calendar
and price action itself are in agreement
that is exactly when you want to be
trading price action being in agreement
with the economic calendar meaning if we
are hovering above a discount array for
example and on that day that we are
hovering above a discount array and we
have news so we have an economic
calendar news driver or that particular
day that is exactly when the economic
calendar and news are in agreement that
is when you want to be trading so let me
explain that here we are on gold let me
give you some context here on gold this
is exactly what we went over as well in
the free weekly forecasts we had this
rare value Gap that daily for bag up to
work with right there we were targeting
all that liquidity but the main target
was this daily for vehicle but I want
you to focus on this fair value Gap
right there now in the weekly forecast I
mentioned that I would like to see this
daily for vicab hold and push price
higher and now you can see why I didn't
expect a huge retracement to an
overlapping PD array based on the
previous episode where we talked touched
on close to the Drone liquidity I would
not want to see a huge retracement
because that would be the exact opposite
of what I would want to see if price
wants to continue higher right there it
will do it fast off of that fair value
Gap how can we know on which day it
wants to expand higher off of that
Fairfax will it expand higher on any day
on any particular day no it will expand
on the day where we have a news driver
supporting the ID of expanding higher so
of course since we're trading gold what
is a new driver that supports the ID of
expanding higher you want to be focusing
on the USD so the US dollar news drivers
for gold now why do we actually use
these new drivers what is a new driver
what happens on a news driver news
drivers bring in volatility in the
market especially high impact ones they
bring in a lot of volatility for that
particular Market in order for us to
trade in the first place what we need is
volatility in the market is the whole
reason why we use kill zones and that is
the whole reason why we now are going to
be using news drivers in order for us to
trade in order for there to be an
opportunity to trade we need volatility
always if there's no volatility you will
see price action like this
consolidations rangy price action so I
would argue that kill zones are very
volatile for a certain session so kill
zones when you want a lot of volatility
for your scalping trades so maybe your
one minute trades Etc focus on kill
zones with close targets a short
duration of time that is when you focus
on kill zones mainly but if you want to
focus and again this can also be
beneficial for you as a scalper when you
want to focus on will the day itself
actually move and will the day expand
you want to be focusing on the economic
calendar if we have USD news USD Empire
State Manufacturing Index for example
then all the USD instruments that are
related to the US dollar so that can
also be your futures yes nasda attack ym
gold silver EU gu all the major Forex
pairs those are the ones that will be
very volatile on that particular day now
there's an exception to this Rule and
you need to listen to this because it's
very important and don't blame me if you
mess up because if you are trading ahead
or during the following three events
that is fomc NFP and CPI you don't want
to execute on that day ahead of the news
event itself and you don't want to
execute on the news event itself five
minutes after the release whenever a
setup presents itself that is perfectly
fine only if it's after the news release
itself otherwise you might get slipped
and that is not trading that is gambling
because think about it when you are
trading CPI NFP and FMC and you're
trading either just before it or the
news event itself what happens you are
at Major risk of getting your account
slipped slippage is when your SL gets
taken and you don't get filled at the
right spot and you get filled way lower
or way higher and Brokers are allowed to
do this during these news events they
don't get taken out at the right spot
and you can get slipped like absolute
crazy you can lose a lot of percentage
you can even lose your whole account or
even your funded account when that
happens you are risking your whole
account to make only three percent four
percent so the risk to reward is not in
your favor the odds are not in your
favor because you need to have 100 win
rate in order for you to then be
profitable and no one ever has 100 win
rate nobody so sooner or later you will
mess up again I'm talking about CPI NFP
fomc those are the ones you want to
watch out for and only trade after the
news release itself but for the rest of
the high impact news events PMI BPI
retail sales unemployment claims
whatever it is it is perfectly fine to
trade before the news release during the
news release or after after the news
release because these news events is
when the day itself will already be more
volatile the news is likely already
priced in you don't think the banks the
institutions don't already know what is
going to happen news is just going to
expand on what already was destined to
happen it's all a smoke screen they can
make the market very volatile and they
have an excuse they have an alibi to
move price so if we take a look again at
gold right here this day this Friday
came into that daily for Valley Gap now
would you expect that Friday to already
expand higher not really because
obviously that is the opposite end of
the week so based on the weekly profiles
we would not expect Friday to continue a
trend we would rather prefer a Thank God
It's Friday setup like we talked about
in the weekly profiles now on Monday
Monday makes the low of this week right
here staying into that daily for vice
Gap why reason being because Monday are
already had high impact US dollar news
right here and you can see Tuesday is a
huge expansion as well why US dollar
news again so here you can see price
action what was it doing we were
hovering above a daily discount rate in
the form of that fair value Gap right
there on which day did we sting into it
on Monday did Monday have the volatility
yes there was volatility on Monday and
Monday here make the low of the week yes
it can because it has the volatility to
do it and then Tuesday expends even
higher so right there that is when you
do want to trade a Monday so here ask
yourself economic calendar and price
action in agreement traded that is when
you want to look for your trades a lot
of people think day trading means every
day trading no day trading means knowing
exactly the days that you want to trade
and when you want to get involved that
is extremely crucial if you can know
that you are ahead of 99 of the Traders
you can already filter out the days
where you know this is the highest
probability and that is the day where we
can actually explode higher or lower
that is not done by our kill zones again
that is done by the economic calendar
knowing the economic calendar so here we
are on EU and just to give you a little
bit of context here on the daily we came
into that fair value Gap right there
that is what we had as a Target and we
had a huge sting into it now we also
have this fair value Gap to work with
right there it's the exact same week the
same economic calendar so we had news on
Monday and on Tuesday for the US dollar
now since it's EU Euro we also take a
look at if Euro has some economic news
drivers and that is an extra Confluence
that we can use so if we dive into the
15 minute ride here we can see that this
consolidation happens so I just told you
Monday will likely be volatile yes but
still price action action needs to be in
agreement first right when economic
calendar and price action is in
agreement that is when we can move and
we know which day wants to move so right
here on Monday we come into that daily
for fire gap and only once we come into
that daily verify Gap that is exactly
when we have the cleanest the highest
probability moves on these days the days
that I'm talking about where price
action and the economic calendar are in
agreement that is when you will have the
absolute most beautiful price action for
example if we now move on to Tuesday
Tuesday right here did we have news yes
we have news do we have price action in
agreement yes because we reached that
Target so we go into the 15 minute and
look at what price action potentially
wants to do and what happens we sting
into it right there a very volatile day
clean moves with a clear Target right
there and what does it create it creates
the high of the week the economic
calendar is giving you a roadmap app
exactly to how you can potentially know
already ahead of the week even starting
where the high of the week and where the
low of the week will be and which days
you want to be trading here we are on ES
and I just wanted to show you an example
of exactly what I mean on days that you
want to avoid right there we are coming
into a daily Vivica we were expecting
higher prices off of this fair value Gap
right there it is also a weekly fair
value Gap and when we zoom in here on
the 15 minute time frame we can see that
we already came into it on Monday right
there and Monday failed to push higher
why Monday didn't have the economic
calendar agreeing to the ID so believe
me you can see it as the intention is
there price wants to move higher there's
no doubt price 100 wants to move higher
the intention is there it just doesn't
have the energy to do it there's no
volatility to do it it needs energy AKA
volatility to do it where's the energy
for that week where's the volatility
coming into the market for that
particular week Tuesday Tuesday had the
economic calendar on its side that is
exactly when you can avoid this price
action right there and that is exactly
how we managed to avoid that price
action now you can avoid getting stuck
in price action like this where we don't
actually expand higher and follow
through and instead we can focus on days
like this where we have a beautiful
expansion and not only that you now can
get to a pair and an instrument you can
trade if you can look at the economic
calendar and you see there's Canadian
dollar news for example then where will
the moves likely happen on Pairs and
instruments that are closely related to
the Canadian dollar so for example USD
Canadian dollar or Canadian dollar JPY
because you know that bear is the pair
that wants to move this week and like we
mentioned this is also a factor on how
we can know if we will reach just for a
fair value Gap or an overlapping PD
array using the economic under so if you
haven't watched that video just yet then
here you can watch it perfect thank you
[Music]
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