Straddle Trade

This is known as a straddle trade. You are looking to play both sides of the trade. It doesn’t matter which direction the price moves; the straddle strategy will have you positioned to take advantage of it.

Now that you’re prepared to enter the market in either direction, all you have to do is wait for the news to come out. Sometimes you may get triggered in one direction only to find that you get stopped because the price quickly reverses in the other direction.

However, your other entry will get triggered, and if that trade wins, you should recoup your initial losses and come out with a small profit. A best-case scenario would be that only one of your trades gets triggered and the price continues to move in your favor so that you don’t incur any losses.

Either way, if done correctly, you should still end up positive for the day. One thing that makes a non-directional bias approach attractive is that it eliminates any emotions. You just want to profit when the move happens.

This allows you to take advantage of more trading opportunities because you will be triggered either way. As most news events tend to have a limited impact on longer-term price action, setting realistic profit targets should help to increase the number of winning trades.

There are many more strategies for trading the news, but the concepts mentioned in this lesson should always be part of your routine whenever you are working out an approach to taking advantage of news report movements.