Just thought I would get some opinions on the merits of trading fundamentals and the approaches therein. Personally, I'm a currency trader -- and I understand that this thread may be largely ignored for that reason (I'm sure most of you trade stocks, options, etc) -- but no reason that you can't also discuss earnings reports, acquisitions, stock-splits, and whatnot.

At any rate, I also wanted to share one particular approach with any forex traders that might be lurking here (as I do).

I don't trade the news very often, but when I do I tend to go for a hedging approach just before the Non-Farm Payrolls are released. About 10 minutes prior to the release I'll place Buy Market Orders on both EUR/USD and USD/CHF. In my opinion, these are the closest you can get to two reverse "mirror-image" pairs due to the heavy correlation between the EUR and CHF.

After placing the two buys, I place two pending SELL limit orders for 25 pips below my buy orders at twice the position size of my buy orders. So if I'm going long for .2 lots then my pending shorts will be for .4 lots. Generally, one of two scenarios happens:

1) The new numbers come in at > 50K jobs either over or under the forecast, in which case a big move tends to follow. At this point, you'll obviously have a solid winner and a solid loser. After the move triggers your sell, you then manage the trade and close at any sign of heavy support (and obv close your long winner as well, as it will be encountering resistance at the same time)

2) The new numbers come in relatively close to the forecast, in which case the trade plays out like more of a standard hedge where you close your winner after a solid gain, and then wait on price action to correct before closing what was your loser (which it almost invariably does after the NFP).

The obvious risk to this is if the new numbers fall in that middling range and your pending sell is hit at the move's low point. However, I've found that 25 pips is a decent range (you can certainly go 30 as well) although if you go significantly less you can find yourself getting whipsawed if the move is strong but not strong enough.

I had a big winner with this method in May when jobs were up 72K from the forecast and only a modest winner in June when only up 3K. But no losses as of yet (small sample though obviously, as it's a monthly report).

No idea if this trade works anymore or not as I haven't done it in years but I used to trade it on every economic number release. It was a futures spread trade between the Euro and Swiss Franc. I would set a very wide bid ask on an autospreader well above and below the market for the spread.

The risk was getting legged up but for the most part it was a very solid winner. The euro would typically make some sort of drastic move on the news and you would get the spread at a very good price and were able to unload it in 20 seconds (or less!) when it snapped back to where it had been trading.

I too have no idea if it works in present conditions or even works over a significant sample. But I'll keep trading it until it proves otherwise.

I'm not in the slightest bit familiar with futures. I've only been at it for six months and have so far just been trading the spot market.

Is this a relatively standard approach to trading news?

NFP for July comes out tomorrow 8:30am EST, so I'll post my results

Bought EUR/USD @ 1.3392
Bought USD/CHF @ 0.9084

Pending sell limits were at 1.3367 and 0.9059 respectively.

Executed the orders 7 minutes before the NFP hit. New jobs came in at 209K for July which was down about 22K from the forecast of 231K. I had a bad feeling as that's right in the trouble zone I mentioned in the OP. Sure enough, my short was triggered and price then immediately jumped up to the high side. I stuck it out and USD bears eventually brought it back down, but was in the trade far longer than expected (about 3 hours). All told, I banked a modest winner of 20 pips.

3 out of 3 so far with this approach.

I wish trading were this easy :P

I'm sure that over the long-haul it isn't. Or perhaps what's hard is just keeping your cool and not bailing when your position goes underwater in the blink of an eye. I've never traded other markets, so I don't know how forex volatility compares to others but, for a newbie like me, it seems downright insane at times.

All you are doing is running a greatest loser contest. Havenstein and Krugman would be proud.

Never thought of it like that