Jaroslav Kohout
Best Practices To Step Up Your Macro News Trading Game Introduction
In this blog post, we will focus on the best practices to step up your macro news trading game. Over the years we have released a ton of material to the trading community about trading the news. Those who watch us closely know we have Elite Traders that specialize in this domain. But not just the Elite Traders. Junior traders are picking this game as well. It takes time to build real proficiency in this specific domain of news trading, but it is the one, that has definitely the edge if you have patience and dedication. This post will try to revisit and summarize some of the key nuances of the content we have published. We will look at trading blog posts, YouTube videos, and Instagram and try to locate golden nuggets from this macro news trading domain. Let’s get started.
Key Trading Clues From The Macro News Domain
#1 Peripheral Vision And Correlated Markets In Macro News Trading
When you trading specific themes, be it Brexit, Italian Elections, or Vaccine news announcements, have your correlated markets next to each other. Build that peripheral vision. Build it so you have the best insight into the pulse of the market. Not always you will be fastest on hearing the news in a squawk or reading it of the Bloomberg, Reuters, or Twitter. Use this peripheral vision as a pulse. In the case of Brexit, traders that normally did not trade the Gilt, brought the Gilt price ladder on the primary screen, next to their Pound and Bund price ladder. Same for the Italian elections. Have your BTP price ladder up next to the Euro. Use that correlation in your trade management and deepen your understanding of broader market dynamics.
#2 Trapped Energy
During highly anticipated events such as FOMC or ECB, record what happened on the day of the event and the day after the event. Build an understanding of the structure that leads to the event. For example, if the event resulted in the congested, inside day, this is a signal that a lot of energy and volume has been trapped in that day and will be released once we broke out of the range. Watch where the energy has been trapped and what weaknesses have been left behind after a day like this.
#3 Be In A Game All Day
A lot of the news announcements don’t come in a planned form. These trades if accessed early are not overcrowded trades. If you want to seize the best RR, you simply must sit at your desk and be ready for those opportunities. There is no other way.
#4 Prep Is King
What goes in the prep? Here is the small excerpt from the Junior Axia Trader and his prep for a particular news announcement:
- Go through the markets you want o trade ie: SPOO (ES), STOXX (FESX), BUND (FGBL), GOLD (GC), OIL (CL)
- Ask yourself what markets will offer you the best risk-reward
- Understand the current market structure for each product you are planning to trade. Why? Because news can be a trigger leading momentum into a bigger picture technical landscape.
- Be aware of how the news can come out and what form (the form/format can have different variety):
- Squawk
- Article (usually captured by Bloomberg/Reuters)
- Organize your workspace with your ladders to the event that is coming up or support the theme of the market you are following
- Set the correct clip size
- Which product is underperforming. In this case, Spoo and Stoxx’s relationship where Stoxx is underperforming over the last days and weeks can give you a better opportunity for market movement than Spoo.
- Define specifically what keywords you are looking for in the release. In this case, Harry trigger words were: “refrigerated temperatures”, “shelf life” and “% success“
- Adjust your expectations about the velocity of the move. In this case, Harry expected that the move won’t be any more such a market mover than the initial Pfizer vaccine news. Why? Read our article about “Diminishing value of news“
How do you best prep for the week? It starts over the weekend. Read our in-depth article: “Macro Preparation For The Trading Week Ahead” about the prep leading into the week ahead.
#5 Hitting Early Primary Markets And Shifting Focus To Secondary Markets
Watch the legendary trade of the Elite Axia Trader hitting markets across the board starting with equities and moving to bonds. The order-flow starts from here and I want you to pay attention to what markets this trader hit first. If you have watched the video, the trader understood in his prep what markets he needs to hit first. He is aware of the time when the possible announcement might come and he is ready to attack. Let’s not forget that this announcement was not planned and he has done his own research to find out when can possibly the announcement hit the wires. His primary market based on the analysis for this specific news is equities. So he is starting with Spoo (Emini S&P500), hitting it first. Moving on then to Dax and Dow Jones. Once he is well onsite, early in a trade, he is looking to get aggressive in the Bond space as a secondary market he wants to hit due to the significance of the news. Hit early, understand what to hit first and what second.
#6 Understand Your Number And Access Strategy
Check how this trader executed on the CPI number (by clicking on the image below) and then continue reading questions and commentary below:
Understand what number or information you are looking for. Have a strategy for outliers. Have a strategy for the consensus number. Based on the number, have a specific strategy in place how to hit the market. If it is an outlier, what is your access strategy? Is it gonna be passive access or aggressive? Debrief previous announcements so you understand what to expect in terms of reaction and structure after the reaction. Design your access strategy according to the previous market performances. In detail. And then execute your strategy with no mercy.
If you liked this type of content, you might check these videos as well:
- AXIA Junior Funded Trader Remains Composed After Missing Vaccine comment Live Trading
- AXIA Elite Trader trades Gilts & GBP On Bank of England Rate Decision
- AXIA Elite Trader Attacks 4 Markets On July 19 FOMC Rate Decision And Presser
In case you are interested in finding out more about trader training to learn how to trade and explore other great trading strategies, check out our futures trading course that teaches you exactly that and more. Or if you want to really maximize your ladder execution, check out our price ladder trading course.
Thanks for reading and until next time, trade well.
JK
