High Impact vs Low Impact Events


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Video Transcription:

Hello traders. Welcome to the news training course and the first module, “The Economic Calendar.” In this lesson, I’m going to show you why we are going to focus on high impact events. And the reason we are going to focus on high impact events is because of the volume that comes into the market and the volatility that this volume implies. This means that we are going to get a bigger move on high impact events, then we are going to get on low impact events, and the main reason we are trading the news is to make a fast profit and we are not going to be able to make a fast profit on low volume and low volatility. So I’m going to show you price action during a high impact event and price action during a low impact event, so you can see the difference.

High Impact vs Low Impact Events

So the first thing we’re going to do is we’re going to go to the Economic Calendar and we’re going to go to last week’s releases. And we’re going to choose a high impact event and go to the charts to see price action doing this, a high impact event and we’re going to choose a low impact event, and look for price action during this low impact event. And last week, we had the Non-farm payrolls, which is the biggest event of the month and we are going to use this as an example of a high impact event and we are going to use, let’s say, we’re going to use the Retail PMI as the low impact event. Better yet, we are going to use the monetary base year-over-year on the Japanese Yen as our low impact event.

So the first thing we have to do is change the time of the Economic Calendar because as you know, the empty four platform uses GMT as their standard time. So, what we’re going to do is, well, right now I have the Forest Factory clock synchronized to my computer’s clock, so my time is 9:42 p.m. So what we’re going to do is we’re going to click on the time and then go to GMT, and we’re going to save the settings. So it’s now 2:44 a.m GMT time. Let’s go back to the calendar and let’s make sure that we have the right time by going through the empty four platform.

And as you can see right here, if we go to, let’s say the 50-minute chart on the GBP/USD, we are now at 4:30 and it’s stating 4:45 a.m on my empty four platform. This is the Euro/Yen one-hour chart. It’s right now printing the 4:00 a.m. to 5:00 a.m. bar. So we need to change again the clock on the Economic Calendar to GMT minus 2. I’m sorry, I think its GMT plus 2, and this is the time on my empty four platform server. So when we go to the Economic Calendar, we are going to get the exact time of the released and we’re going to be able to match it with the empty four without a problem.

So the first thing we’re going to do as we said, we are going to go to our last week’s calendar and we are going to use the Non-farm payrolls and we are going to use the monetary base year-over-year on the Japanese Yen. So we are going to use the Euro/US Dollar to track the price action on, during Non-farm payrolls and we are going to use the Euro/Yen to track price action during this release. So what we’re going to do is, well, we’re just going to make this charts bigger, okay. The Euro/Yen and the Euro/US Dollar and we are going to go on the four-hour charts to look for the actual release.

NFP Charts

So the Non-farm payrolls were released at 3:30 p.m. on my empty four platform server time and the monetary base year-over-year was released at 2:50 a.m. on Thursday. So that’s 2:50 a.m. on Thursday and 3:30 p.m. on Friday. So we’re going to go to the one-hour chart on the Euro/Yen, no the 50-minute chart to look for better price action. The first thing we’re going to do is, we’re going to go to our May 7th and the release was around 2:50 a.m. So we need to go back and see, look for the 2:50 a.m mark, there you can see that we have the 3:00 a.m. mark right here, so we are going to put a horizontal line where the release, where the data was released. And we have to go on the Euro/US Dollar on May 8, at 3:30 p.m. So what we’re going to do right here is, we are going to go to May 8, 3:30 p.m. and as you can see it right here we have this huge candles, right about here.

NFP on MT4

Now this is the Non-farm payroll released and this is the economic or the currency base year-over-year on the Japanese Yen. So the first thing you’re going to notice is the range on this two moves. We have the high of the move right here and we have the low of the move right here. So, during this news event, we have a range of over 100 pips on a high impact event and that’s a pretty nice range for a news release. And if you go to the Euro/Yen, you can see that it actually only has a 30 pip range during the low impact event that was released around this time. So right now, we are not looking to show you or at least, I’m not looking to show you how to trade these events or how to look for the future direction what’s the event, or was it that is released. What I’m trying to show you is why we are going to choose high impacts event over low impact events. And the reason is that during high impact events, we are going to have a wider range and by having a wider range, we are going to have better opportunities to make a nice profit trading this news.

Adam

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