Fade Away News Trade Forex Trading Strategy For MT4
Table Of Contents:
- Fade Away News Trade Forex Trading Strategy For MT4
- Essential elements used in this strategy
- Functions of these essential
- The long trade setup sequence
- The short trade setup sequence
- Fade Away News Trade Forex Trading Strategy For MT4 – Useful advice
- Fade Away News Trade Forex Trading Strategy For MT4 – Conclusion
Please note: This strategy was publicly published in the trading community and is free to use. We do NOT make an attempt to decide if this strategy is profitable or not, because we know that the major factors regarding trading results are the skills/experience of the trader who executes the strategy. Therefore, we are mainly explaining the components and rules of the strategy. If applicable, we are highlighting advantages, disadvantages and possible improvements of the strategy.
The Fade Away News Trade Forex Trading Strategy For MT4 is a very professional method to trade major news releases which produce a price spike. You may have often seen huge price spikes after news of the major impact category was released. Such news can be decisions about interest rates or unemployment reports.
The naive trader would try to enter a trade in direction of the price spike. But directly after the release of high-impact news, the spreads can be very high and the slippage can be enormous which makes it very unlikely that you can profit in such a quick-moving market. Now let us study the essential factors which we need to use this strategy.
Essential elements used in this strategy
- Economic calendar
- The severity of the news
- Fadeaway
- Trade timing
Market volatility increasing after the release of NFP data
Functions of these essential
The above mentioned 4 element is the basic factors by which we will evaluate the state of an asset. Before the release of high-impact news, the seasoned traders start looking at these metrics and prepare them for the trade execution process. Unless you have a clear concept of these basic terms, things will be really difficult to execute the trades. Now let’s get a brief idea about these essential elements.
Economic calendar
The majority of novice traders are not aware of the exact time for the major news. But to use this strategy, you should be following an economic calendar very strictly. Instead of relying on a generic economic calendar, you need to access a reliable Forex news website.
Once you start following the economic calendar, you should be able to scale your trade before the release of the major news. Most importantly, you won’t get busy taking random trades when the market volatility increases in a significant way.
The severity of the news
After going through the economic calendar, you will realize one key fact. The news is divided into three major classes. News like NFP, interest rate decision, ECB press conference, FOMC statement, etc. is considered as high-impact news. Only skilled traders should look for the trade signals after the release of such major news as the market becomes extremely volatile.
Classification of news in Forex market
On the contrary, factors like Import prices Q/Q, trade balance, Bond Auction, etc. are considered as low-impact news. During the low impact news, the volatility of the hardly increases. However, news like pending home sales, Manufacturing PMC data can create moderate volatility in the market. Taking the trades after such news is relatively easy.
Fadeaway
Fade way is the most important phenomenon which we need to consider to use the Fade Away News Trade Forex Trading Strategy For MT4. After each news release, you should notice an increase in the price volatility. The intense volatility usually results in a breakout but soon the extreme buying selling pressure subsides.
Spotting the fadeout
As the pressure subsides, the price of the asset enters into the retracement phase. We will be taking advantage of such retracement and take our trades in favor of the recent volatility. But this doesn’t mean we will wait till the trading session is over and execute the trades during the inactive trading session.
Trade timing
To manage the trades efficiently, you have to time your trade properly. Let’s say you are looking for the fade-away signals in the EURUSD pair. So, you should be taking the trades in the European or the New York trading sessions only.
If you take the trades during the inactive trading session, you will be stuck with the consolidation movement in the price. So, use the Fade Away News Trade Forex Trading Strategy For MT4 during the active trading sessions only.
The long trade setup sequence
By now you should have the idea that this system is not dependent on any kind of trading strategy. So, to take the trades we need to rely on the manual support and resistance level along with the price movement. So, without any further delay let’s check the prime conditions which will allow us to execute the trades with the help of Fade Away News Trade Forex Trading Strategy For MT4.
Conditions to execute the trade
- Check the economic calendar and analyze the severity of the news. Prepare yourself to execute the trades 1 hour before the news is released.
- Draw the support and resistance level manually in the M30 or H1 time frame. You may have to take the trades at the break of the resistance or the critical support level.
- After the news is released, the price will either break the resistance level, or you might experience a false break of the support level. Spot such a breakout zone in the main chart.
- As the breakout takes place, you will notice the market momentum is slowly becoming normal which is the indication that we are going to get the trade signals.
- If we have a false break of the support, we may have to wait till the price surge through the broken support level.
- Once we have checked all these conditions, opening a new long trade would be a justified act.
Execution of the long trade
Stop loss
While using the Fade Away News Trade Forex Trading Strategy For MT4, we need to use the stop loss rationally. As the market loses momentum, we may place our stop loss below the support level.
If the price breaches an important resistance level, in that case, we may set the SL below the broken resistance which is now acting as the strong support.
Take profit
To determine the take of a certain instrument, we need to analyze the resistance level. If the fade-out results in extremely low volatility, the nearest resistance level will be our profit target. On the contrary, if the market again gains bullish steam after the fade-out, we may set the take at the nearest high.
The short trade setup sequence
Taking the trades after the news event requires expertise. Most people think to trade the news they have to deal with the intense volatility. But with the Fade Away News Trade Forex Trading Strategy For MT4, you are getting the chance to trade in favor of the news after the momentum fades away. Now let’s check the prime condition by which we can determine the short trade signal is valid.
Conditions to execute the short trade
- Analyze the economic calendar and get yourself prepared to deal with the market dynamics after the release of major news.
- Draw the support and resistance level in the M30 or H1 time frame as it will act as the potential trading zone.
- After the news is released, you should be looking for the breakout of a consolidated zone. In some cases, you may find a break of major support or a fake breakout at the major resistance.
- Once you have identified the bearish price action signal at the resistance level or the break of a support zone, you have the primary short trade setup.
- Check the economic news data and make sure you are taking the trades in favor of the announced news.
- Once you have checked all these conditions, you do have the liberty to execute the short trade.
Execution of the short trade
Stop loss
The placement of the stop loss depends on the nature of the breakout or the fadeout. If the price rejects a resistance level, set your SL above that zone. On the contrary, if you are taking the trades on the break of major support, you should set the SL above the broken support at it will act as a strong resistance.
Take profit
Determination of the take profit greatly depends on the trader's skills. You may use the standard 1:2 risk to reward ratio or depend on the nearest support level. If necessary, you may use the key swing low to set your take profit target.
Fade Away News Trade Forex Trading Strategy For MT4 – Useful advice
As you learn about the fade-out pattern, you will gradually start to understand the retracement phase much better. Fade out is nothing but the loss of sudden momentum. So, while you use the Fade Away News Trade Forex Trading Strategy For MT4, rely on the active trading sessions only. If you chose to take the trades during the inactive trading session, it will be really hard to manage the trades due to a lack of volatility.
Fade Away News Trade Forex Trading Strategy For MT4 – Conclusion
Trading is all about making smart decisions. You may know the detailed use of the Fade Away News Trade Forex Trading Strategy For MT4, still, you have to lose trades. No one can escape the fact, losing trades are inevitable. So, get yourself geared up with a strong risk management plan. And study the losing trades so that you can learn from your weakness.
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