Fri. Mar 5th, 2021

Fxtriangle | Market analysis | Managed trading

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How to Trade the News With a Directional Bias?

2 min read

One of the advantages of trading with a directional bias is that it filters trade selection. In the presence of a bullish directional bias one will give preference to long positions and within the presence of a bearish directional bias one will give preference to short positions.

  • Positions that are against the directional bias are disallowed completely. For example: if there is strong evidence that the market is probably going to maneuver up, then sell setups are less likely to succeed and that they also are a possible distraction.
  • Positions that are against the directional bias must meet more stringent requirements. This is the more nuanced of the two options. It still allows the trader to require counter-bias positions, but there must be very strong reasons for doing so. Typical examples: a setup with a very high expectancy, a setup offering higher logical R:R than what would be required on the average, a scalp setup that might be barely visible on the time frame chart, and others.

Traders always hunt for maximizing returns from their winning trades. It are often bittersweet closing an edge at its original and predetermined target only to observe the market continue within the same direction without offering a transparent opportunity to reenter the position.

The advantage of trading in tandem with a time frame directional bias is that a trader is more likely to

a) select appropriate targets;

b) manage the trade better/be able to filter out intraday noise more effectively

 

 

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