Introduction
NewsAutoTrader (NAT) is an
advanced Forex
news spike trading tool that generates trade signals by processing
live news headlines. Using it you can trade many economic indicators, such as US
Nonfarm Payrolls, (US/UK) GDP, CPI, Retail Sales, Interest rate announcements, and other
news releases that impact the Forex market. It can be useful for other markets too, such as Futures.
Unlike similar tools that are offered as [expensive] subscription services, NAT is
standalone software, it is not a signal service.
What is news spike trading?
Important economic data is usually released to
news agencies from statistical organizations / central banks at fixed times and consists of one or more numbers (example: the
number of newly created jobs). If the number is considered
important and the actual number deviates enough from what was expected (called a
consensus) by economists and market participants, this usually causes
considerable one directional movements of prices of certain currency pairs, in accordance
with the deviation from consensus number. However, the most price movement usually
happens within a few seconds - there is a price spike. After that period
the price may still go the same direction for a few minutes or more, but
generally the longer the time passes, the more unpredictable becomes the
direction (market stabilizes).
News spike trading is trading these quick price moves caused by news. Trades are
usually held from a few seconds to a few minutes.
If you were to trade news spikes manually - read the numbers from news and decide what trade to place, you would likely lose money or make little, because the initial spike can happen very fast, the most of the price move could be already over.
How NewsAutoTrader works?
NAT functions as a news aggregator, processor and auto-clicker. It can read news headlines from various news sources, instantly extract the economic indicator values from them by using pattern matching, and according to your defined triggers, automatically open trades in your broker platform by simulating mouse clicks. Almost any broker can be used with NAT, it only needs to execute trades fast enough. Opened trades need to be closed manually (it's a semi-automated system).
There are many MetaTrader 4 (MT4) brokers
that provide free market news in their platforms. Some of them deliver the news
very fast, with little delay (often even before the price spike). NAT is
able to read news headlines from MT4 terminals in real-time and use them for
generating trade signals.
If you have access to other news feeds, they can be also integrated
(full version), you are not limited to MT4 news
sources.
Using multiple news sources aggregated (combined) into a single stream
helps to receive the economic data faster - some news sources sometimes
may be faster, some - slower. This allows to use only the fastest news
source for generating trade signals.
News headlines are processed by the included scripting engine that extracts
economic indicator values by using pattern matching and generates the trade
signals (BUY/SELL). Because the headline patterns for specific indicators are
usually consistent (depends on news provider), indicator values can be easily
extracted.
NAT includes scripts for most tradable US, UK and Canada economic
indicators, but you can
also write your own scripts or modify the existing scripts. The trade logic, how to
interpret the headlines, what patterns to use, is completely customizable.
Trade signals normally are generated by comparing the economic indicator actual and
consensus values (their deviation). For example, if the deviation (actual -
consensus) is positive and reaches or exceeds some your defined limit (trade trigger),
then a BUY signal is generated. If a negative trigger is hit, then a SELL signal is
generated.
Sometimes multiple important economic indicators are released at the same time and
if their deviations are conflicting then the signals can be unreliable (price may move the
opposite way). To avoid this, NAT can process multiple indicators (as programmed
in the script) and only if
their deviations do not conflict the trade signal will be generated.
When a trade signal is
generated the auto-clicker allows to quickly execute the trade on your
broker platform by instantly clicking either BUY/SELL/SUBMIT/etc. button to
open the trade.
NAT supports 2 level trade triggers - BUY, BUY+ and SELL, SELL+. Often
large deviations create larger, more predictable price movements. This
feature allows to differentiate the trade size (lots/units) according
to deviations, so you can open larger trades in case of large deviations
to increase the potential profits.
Disclaimer: trading foreign exchange, futures, stocks, and other financial instruments on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in these instruments you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore your should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading, and seek advice from an independent financial advisor if you have any doubts.