How to Cope with Sell-Off & Poorer-than-Expected News Data

(Originally posted in my forex killer autopilot trading blog)

How do you protect yourself from a technical sell-off situation and the latest fundamental news development?

On our "members support" sites, we provide you with technical warnings and news alert which might act against your positions during our price monitoring hours - from the opening of London session to the opening of US session.

For the purpose of market coverage in these active hours, Forex Killer signals will be sampled at two fixed hours. The signals provided on member site are generally in tune with our daily market sentiment strategy. Thus, they are usually strong technical trading setups good for position entry.

However, no matter what, we should always prepare ourselves from the unexpected events.

Let's use today's price action as a case study. I've chosen the most volatile carry pair - GBP/JPY and also the most popular major currency pair - GBP/USD as examples.

a) An unexpected fast liquidation of carry trade positions i.e. GBP/JPY selloff.

The forex killer signal software recommends the use of 70-pip as both stop loss and profit target levels for each position opened using the hourly (H1) timeframe. We believe they are fairly reasonable levels which basically give us a reward-to risk ratio of 1 - 1 .



As you can see, we help you keep a close eye on the position for at least 3 running hours. Warning will be flagged once the recommended stop loss level has been breached. In this GBP/JPY case, a running loss of 70 pips or more has been highlighted to warn you in real time. We recommend you to cut your losses by sticking to the forex killer suggested level. This is because you should always expect the unexpected, in this case, massive liquidation (sell-off). We had this scenario this morning as the GBP/JPY moved another 200 pips against the position after the stopped-out level. We will do the same for the purpose of profit taking if the price has moved past the price target.

b) Unfavourable news events i.e. which acted against the underlying sentiment of GBP/USD

Forex killer software does not recommend strongly on its use for news trading. However, we believe that trading economic news event can be very rewarding and exciting. Price usually moves according with the news and we will have a great move if the news are in sync with the underlying market sentiment.




On the member site, we will alert you on the upcoming news releases and also help you analyse the actual numbers and their meanings in real time. This will allow you to make a better trading decision to either exit or lower your stop loss level, if the news has acted AGAINST the underlying market sentiment. As in the GBP/USD case, you will have all the information you need to end the position sooner as a winner (from +5 to +10 pips) rather than let the winner turning into loser (-20 pips or more).