News will tell you When to Trade (Economic Roadmap) - Ep 25

Summary

The 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

00:00

📅 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.

05:00

⚠️ 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.

10:02

📊 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.

Keywords

💡Economic Calendar

The economic calendar refers to a schedule of significant news events or reports related to the economy, such as inflation data or central bank announcements. In the context of the video, it serves as a roadmap for traders to determine which days will see increased market volatility. The speaker emphasizes that price action and the economic calendar need to align to identify the best trading opportunities.

💡Price Action

Price action refers to the movement of a security's price over time, often used in technical analysis. In this video, price action must align with the economic calendar to indicate the most optimal days for trading. For example, the video highlights days where price action shows agreement with news drivers, which signals potential expansion or contraction in market prices.

💡Volatility

Volatility is the degree of variation in trading prices, usually marked by rapid market movements. The video stresses the importance of volatility, noting that traders need it to make profitable trades. High-impact news events, such as CPI or NFP, often cause volatility, and traders should anticipate this to avoid getting caught in consolidating or range-bound price action.

💡Kill Zones

Kill zones are specific periods during trading sessions where market volatility tends to spike, making them ideal for short-term trades. The speaker explains that kill zones are especially useful for scalping trades on shorter timeframes. They create opportunities for quick trades with close targets due to the heightened volatility within these windows.

💡News Drivers

News drivers refer to significant economic events or reports that cause market volatility. The speaker stresses their importance, indicating that traders should focus on these events when making trades, as they bring energy and movement into the market. Examples include U.S. dollar-related news, which influences gold prices and major Forex pairs.

💡Fair Value Gap (FVG)

A fair value gap is the difference between a security's perceived fair value and its actual trading price. In the video, the speaker uses the concept of FVG to analyze potential price expansions. Traders often target these gaps for entries, especially when price action aligns with the economic calendar to indicate that price will either expand higher or lower.

💡Consolidation

Consolidation occurs when a security's price trades within a range without significant movement in either direction. In the context of the video, the speaker warns against trading on days that will likely remain in consolidation, as these days lack the volatility needed to make profitable trades. Instead, traders should wait for price expansions, which are more likely on days with news drivers.

💡Slippage

Slippage is the difference between the expected price of a trade and the actual price at which it is executed, often occurring in fast-moving markets. The speaker advises against trading during high-impact events like CPI or FOMC, as slippage can lead to significant losses. Traders might get their stop-loss orders filled at far worse prices, which can result in large financial setbacks.

💡FOMC, CPI, NFP

These are high-impact economic events: the Federal Open Market Committee (FOMC) meeting, Consumer Price Index (CPI) report, and Non-Farm Payrolls (NFP) report. The video advises traders to be cautious when trading around these events, as they cause extreme volatility and can lead to slippage. The speaker recommends waiting until after these reports are released before taking trades.

💡Scalping

Scalping is a short-term trading strategy focused on making small profits from rapid price movements. The video mentions scalping in the context of kill zones, where traders aim for quick trades in volatile periods. Scalping requires precise timing, and the speaker advises using kill zones for these trades, but only on days where price action and economic calendar align to ensure sufficient volatility.

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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