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What strategy can be used to predict the direction of the chart before the news is released?


Matt helped me out with my last answer on narrowing down data feeds to use with scalping news releases and he mentioned Optimus News. This looks like a great resource that I will start using!

I’m now thinking about implementing some new strategies into my personal trading method.
I typically never have tried it, but lately, I’ve read a lot about trading alongside news releases and am thinking about picking that up. My original plan was with CFDs, but now I think I will just stick with futures.

Does anyone know of any strategies that I can use to predict the direction of a chart before a news event is released?


Trading the news comes with both sides of the coin, imho.
You are looking at potentially 3 major outcomes:

  1. big surprise up or down,
  2. no reaction whatsoever
  3. initial move in one direction followed by a big reversal.

These can be anticipated to a degree by selecting a variety of trading strategies.
The trick is to be very prepared. Know your game plan and prepare for lots of volatility which is what most long vol. traders are looking for.

One must be aware that stops may experience bigger then normal slippage but to compensate for that, it may be a good idea to go for bigger targets, so when you are correct, you make much bigger gains then frequent and almost “certain” losses after the news event hit.

Hope that helps.