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Flash™ Trading System
Flash™ Trading System is used to trade at important news time (Fundamental Analysis). The success rate of
this strategy depends on news announcement you trade and slippage. Sideway market is an enemy of this strategy. The idea is
to place two pending orders, Stop Buy and Stop Sell order
prior to economic news release. Almost all the time, you will grab enough profit in a very short time (in seconds or minutes) like a flashing thunder.
If the news is bad or good enough for the corresponding countries (indicated by a big difference from actual and forecasted number).
then market price will usually move accordingly. How big is the movement ? it depends on the importance of the news.
If the price is moving upward or downward, you will still make profit.
The monthly return is about
2-5%. Please note that this strategy is not so profitable at today market (50% fail probability)
unless you combine this strategy with Super Hedging Forex Robot. So we recommend you to use the Double Impact strategy if you
are not using our Super Hedging EA.
Here are step by step instructions to trade with Flash™ Trading System :
Download or take a look at Economic Calendar from search engines for weekly important forex news announcement
schedule or check our schedule below this article.
Download, install atomic clock software (the most accurate clock in the world) and set your watch / clock to the precise
and accurate time. This software could be downloaded for free at http://www.qlock.com.
Change the clock setting to hour : minute : second.
Only use GBP/USD pair (for US and UK news announcements) and USD/CAD pair (for Canadian news
announcement). About an hour or two prior to economic news release, you can check your trading software for today's
High-Low Daily Range (substract
Highest price with Lowest price of the day to find out daily High Low range)
In case the current day's High-Low Daily Range is more than 100 pips, then it is better to set a lower target or dont trade
the news. The ideal range is less than 70 or 80 pips.
Set your contract size (lot) to 30 or 50 times your equity (assuming there is no other open position).
Example : If your balance is $3000, you can use standard lot of 100K or 150K
Open GBP/USD Chart (if you trade on US and UK news release) or USD/CAD Chart (for Canadian
news release) and set the chart to 1 minute timeframe. Order a “Buy Stop” and “Sell Stop”
13 pips above and lower to the current market price 1 minute prior to news announcement. (less than
1 minute if you use Robot/Script). US Non Farm Payroll is an exception, you can place the orders 15 pips or more (up to 16-18 pips) away from market price.
Warning : You have to practice a lot in order to put these orders correctly and quickly. It is adviced to use robot/script
to help you automatically calculate and place these order in a short time.
Example : current quote Bid/Ask 1.1950/55, place a Buy Stop Order at 1.1955 + 0.0013
= 1.1968 and Sell Stop Order at 1.1950 - 0.0013 = 1.1937
Put a stop loss 20 up to 30 pips (max) and you can set the target based on the
importance of the news. We often limit the profit
target to a small amount of pip 10 - 25 pips for safety.
(US Non Farm Payroll is an exception, you can place a target of 20 up to 30 pips)
You must be wondering why the target is so small ? Let me give an example to help you understand how much you will earn.
Calculating the potential return you may get, I will use a base case :
You earn at approximate of 70 pips monthly.
The balance is $10,000, so you need to use contract size of (lets say 40 times equity) = 40 x 10,000 = 400K standard lot.
Each pip will be $40. Your monthly profit is around $40 x 70 pips = $2800 (28% of your equity)
Others trading system (paid) usually claim their strategy is the best and you will get hundreds
of pips monthly. But have you ever thought or double checked how constant and reliable is the result ?
Its completely useless if you earn hundreds of pips for a few months and get a margin call the following month.
Keep in your mind, safety and constanity is our main concern ! And we dont want you
to be a part of 99% traders whose lose all of their money in a few trading months. Dont be too greedy, as there is always other time to make profit.
Right after you activate both pending orders, keep monitoring 1 minute chart 1 minute before up to
2 minutes after the news release. There are 2 possibilities :
1) If market price jumps, then one of your pending orders will be executed whether it is buy stop or sell stop order.
Once an order is executed, quicly cancel the other order, without waiting the target of executed order has been
reached or not.
There are two more possibilities :
A. Your Profit Target is hit and closed less than 1 minute after the news release.
Lets say, an important US news is announced at 8.30 EST, your order will be closed in profit before 8.31, this case usually happens
when the actual news result differs a lot from forecasted one.
B. Your Profit Target has not been hit but your order is executed and still open.
If High Low Daily Range has been 100 pips or more, you can close (cut loss) the open position even the target has not been
hit (could be still in small floating loss position). Or you can wait for a maximum of 1 minute time. If the profit target
hasnt been hit in 1 minute or it is getting worse, close open position manually.
In case the High Low Daily Range prior to news accouncement is less than 100 pips (less than 70 or 80 is the ideal range),
try to monitor the chart to a maximum of 2 minutes after the release. (For you that have been trading the news for a while,
checking the difference of actual result and forecasted result will help you to make a decision.
If the profit target hasnt been hit in 2 minutes or it is getting worse, close open position manually.
If you trade on Non Farm Employment Change (Non Farm Payroll), its better not to close the other order eventhough
the first order has been executed (but not yet hit the profit target). Leave both orders open as usually the price will
reverse and this could minimize your loss. (One order is closed by stop loss and the other order is closed by target profit).
.
2) If market is not moving up to 1 minute after news release, quickly cancel all pending orders.
Weekly Important News Schedule (New York Time): (Updated once a week)
Day
Date
NY Time
News
Rate
Traded Pair
Monday
NO TRADE
Tuesday
15 Dec 2009
4.30 AM EST
UK CPI
B
GBP/USD
Wednesday
16 Dec 2009
8.30 AM EST
US CPI
B
GBP/USD
Wednesday
16 Dec 2009
2.15 PM EST
US Interest Rate Statement
A
GBP/USD
Thursday
17 Dec 2009
4.30 AM EST
UK Retail Sales
B
GBP/USD
Friday
NO TRADE
NY Time (DST) = GMT -4
NY Time (EST) = GMT -5 (NY is now in EST, EST ends on Mar 14, 2010)
Profit/Loss = Profit or Loss slightly vary and strictly depends on your skill, broker, stop loss, and profit target !
Trading Performance above using a Standard Range of 12 or 13 points (above and below current market before news
announcement), TP=10 points SL=20 points, yet US Non Farm Employment Change is an exception (15 points range, TP=15 SL=20).
However you can set your own TP or use a trailing stop for bigger Take Profil Levels.
Trading performance above was done manually (not using Expert Advisor / Forex Robot). To use this technique with our
powerful Forex Expert Advisor for Free *, please visit
http://www.learnforexpro.com/expertadvisor.php
