Forex market experiences increased volatility during news time, which creates an opportunity to capture the move and earn/lose pips in a matter of minutes or even seconds.
Not every Forex broker if good for trading during news times with.
There are several important factors that news traders look for in Broker services:
- fast trading platform, fast feeds and chart updates
- fast order execution, minimum re-quotes
- instant guaranteed execution of pending orders
- instant guaranteed execution of stops
- reasonably low spreads
- no significant spreads widening during news spikes
- one-click-trading as an additional bonus.
There are several common problems many traders face when trading during the news with regular Brokers:
- Trading platform freezes, no new orders are taken, no orders can be closed.
- Requests for new trading orders are declined, instead traders get re-quoted multiple times.
- Existing pending orders are not filled in time, not filled at all, or filled later at very unattractive price, which results in a loss.
- Existing stops are not honored to the point of being completely ignored or filled later at much worse price, resulting in a larger than expected loss.
- The very moment before news releases there is an opportunity for a broker to manipulate prices at own discretion, for example, by creating a false spike to trigger nearby trading orders, so that when real reaction to news comes in, it'll cause the market move into the opposite direction, dragging in the losing trades, caught on the first artificial spike... Since market experiences increased volatility during news time, the price manipulation from a broker is expected to be hidden/covered by overall price volatility.
Some large Forex brokers practice sending emails to their customers before the very important news releases (for example, Non-farm Payroll Report) advising about upcoming news hours and the fact that there will be no guaranteed order execution during the news release.
But most brokers don't send such emails, therefore traders should educate themselves about specifics of News Trading in Forex, and learn as about how their broker operates during news hours.
Forex Brokers for News trading - Quote List
The list is based on the statements given by Forex brokers on their websites:
Advanced Markets FX
"Q. Will I be able to get executed during news events such as non-farm payrolls?
A. As a result of Advanced Markets not taking the other side of our clients trades, there is no trading risk to Advanced Markets and therefore no reason to interfere during volatile times. Your executions will remain constant during all market conditions. The banks stream prices and depth of market that are executable and real, so there is no reason for there to be a difference in execution during these volatile times."
"Q. Do you allow all trading styles including scalping, news trading and high frequency?
A. We don’t impose any trading restriction and actually we welcome any trading style. We offer multiple trading Feeds to satisfy the needs of some of the most sophisticates traders. However, among other factors, please keep in mind that volatility and news events may cause spreads to widen suddenly which may increase the chances of slippage and/or getting filled at a price worse than desired."
"Traders choose FXCM because our No Dealing Desk Forex Trading Execution eliminates the conflict of interest between broker and trader. With this execution model, traders have complete anonymity from liquidity providers and do not have to worry about dealer intervention. Traders also trade without restrictions.1 They can scalp the markets, trade during news events, and even place entry orders inside the spread... With multiple liquidity providers quoting prices to FXCM, there are competitive spreads, even during market-moving news events."
"Our spreads are:
- Tight (EUR-USD 1 pip, GBP-USD 2 pips, ...)
- Don’t vary, even when there is news"
"Trade during breaking news".
"Q. Can I Trade During Economic or Geo Political News releases?
A. IamFX does allow trading during the news. However, we wish to warn clients of the dangers associated with such, namely: During major Geo Political News releases markets may become extremely volatile. Due to potential price gaps, IamFX cannot guarantee fills during news releases. Orders may be filled at the next available price and will not always be filled at the requested price or stop. News releases may also cause wider spreads than are typically seen during normal trading hours. We advise traders to use discretion when trading during the news. Please be advised that due to the volatility of price fluctuations during the news, it is possible to see a delay in execution due to the additional verification necessary for each trade. "
Gallant Capital Markets
"Q. Can I trade during Economic and Geo Political news releases?
A. Gallant does allow trading during the news events. However, we wish to warn clients of the dangers associated with such. Namely, during major geo political news releases, markets may become extremely volatile. Due to potential price gaps, Gallant cannot guarantee fills during news releases. Orders may be filled at the next available price and will not always be filled at the requested price or stop. News releases may also cause wider spreads than are typically seen during normal trading hours. We advise traders to use discretion when trading during the news. Please be advised that due to the volatility of price fluctuations during the news, it is possible to see a delay in execution due to the additional verification necessary for each trade. "
"News Traders Welcome. No Hedging Restrictions - our trading methods are not subjected to any controls and we do welcome NEWS traders."
"Features include: News trading "
"Q. Do you allow news trading?
A. Yes, we do. "
There are Forex brokers who say (on their websites) that traders can trade news with them. If you happen to come across such broker, please send us a link. Thank you for your help!
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If you have a minute or two...
We'd love to hear your quick comments on what you liked about a broker you trade with:
- was it about fast order execution?
- low spreads?
- no slippage, no requotes?
- any other features that made news trading possible?<