News volatility straddle strategy :
In news volatility straddle strategy, a trader needs to open two positions in the forex market for any currency a high impact news us to be released for. Take for example, the US non farm payroll data to be released by the United States will have a high impact on the United States dollar. When opening your two positions as stated earlier, you have to open with United States dollar currency pairs like the EURUSD, GBPUSD, USDCHF, etc. I suggest you go with the major currency pairs. Set a buy stop and sell stop order two minutes before the news is released at 10-20 pips higher and lower than the current market price for the buy and sell stop orders. Once the news is released, high volatility will occur and the price will move quickly in a certain direction and as this occurs, one of your positions will be triggerd and you will have to close the other position quickly. Your take profit should be set 30-50 above or below the opening price and your stop loss should be set calculated by the difference between the two positions, that is the difference between your buy stop and sell stop order.
What happens when a high impact economic news is being released?
When a high impact economic news is being released, it creates high volatility, price slippage occurs, we often notice widened spreads and sometimes we notice slow trade execution. This usually occurs because of the higher volatility during the period of high impact news release.