Technical Traders… beware of Data Releases. Otherwise, they may Surprise you!
Though you are trading based on Pure Technical Analysis, you should be aware of Fundamentals also. Because, most of the times Technical Analysis works. But at the time of Data releases, for the time being, impact of the released Data dominates it.
Some times, you might have experienced that; your perfect Technical Analysis Trade may hit the Stop Loss in a moment of time. This happens because of the impact of the News release.
Before major News Releases, price moves slowly for some time, waiting for the Data Figures. Once, the Figures are released, market reacts very quickly and you can see some big Spikes with in Seconds. In this case, if your Technical Orders in place, within no time, your Stop Losses may hit and you can witness some big losses. See the EUR/USD Chart below.
Today, at IST 6.00 pm, US Nonform Payrolls and Unemployment Rate releases were scheduled. Before some time Market moved Sideways and immediately after Data released, a Big Spike occurred in EUR/USD. It was a 1 Minute Chart and we can 62 Pips movement in less than a minute.
So, though you are a Technical Trader, keep an Eye on Data releases. Make sure, there are no Open Trades before major News Releases.
Of course, if you are a Fundamental Trader, you can Catch some of those moments. Analyze the Data and prepare yourself to catch some Pips from those big Spikes. See the EUR/USD Chart below.
Before Data release, I have placed a Buy Stop Order and a Sell Stop Order with 0.3 Lot Size and put a Stop Loss of 10 Pips and take Profit of 30 Pips and activated Trail Stop for 5 Pips.
Immediately after the Data release, my Sell Stop Order was executed and with in 4 Seconds, TP Hit and made a Profit of $65.70.
So, if you are a Technical Trader, keep on Eye on News releases and avoid trading at that times. If you are a Fundamental Trader, try to catch some of those moments.