For beginners, Straddle trading in a lay-man definition is described as a method of merely placing two pending orders before a news is released, a sell-stop, and a buy-stop. The essence of this is to set a trap to catch market moves after a news release that may go either way.If a news release comes out bullish, and bullish spike will trigger the buy-stop, and hopefully, the trader can make some money, the same applies to bearish spikes.So with straddling, the direction of a news release is not so important.
Yes, This seems so simple, and anyone can ordinarily make fortunes using this “trick,” unfortunately, Forex brokers know this (so don’t be so excited yet). They have placed a series of barriers over the years to prevent traders from using the Straddling strategy. This strategy no longer works as it ought to(when doing it manually), if you attempt to straddle-trading manually, you’ll probably end up getting burnt and losing your hard-earned money to your Forex broker.
“THG Straddle Trader Diamond” is developed to help you trade news releases. Removing most of the barriers associated with manual straddle trading. What exactly are these barriers?
BARRIERS ASSOCIATED WITH MANUAL STRADDLE TRADES
Brokers’ widening of Spreads during news releases could make you pay a huge percentage of your Margin as “spread” alone, NO trader wants this BECAUSE spreads could move from 3pips to 30pips during news times, would you want to be in that trade? Brokers invented this to scare traders off during important news events like the Non-farm Payroll and GDP releases and many others.
Frequent Re-quotes are noted seconds before and after the news release (not all brokers) thus preventing your orders from getting placed manually and if you do luckily get into the market with your manual pending order, requotes would not allow you take any profit in time-until the market starts reversing.MEANING, your profits turn into losses. This happens too frequently, sounds familiar??
You can’t easily set your pending manual orders close to the event’s release time(due to Huge spreads and requotes). Traders attempt to put them about 15mins before the release time. This is risky because If your orders get filled before the market moves, that’s NOT good. After all, you stand a risk of sustaining massive losses. In straddle trading, the main rule is “NEVER get filled into the market before the forex news comes out”, that’s why it uses pending orders.
If you lucky enough to avoid server issues and successfully place your pending orders about 5-10seconds before release (this is the ideal time spacing), you would not have enough time to set your Take-profit, Stop-loss, and Trailing-Stop levels.
With manual Straddle trades, you could have a hedged scenario when quick movement in both directions (which happens a lot). With this, both your orders would get filled at the same time, and you would sustain small losses.
Slippage is another dreaded factor; this EA has slippage control to stop the trade if the slippage of the broker is too much.
I don’t have any recommendation expect “READ THE MANUAL“