Guideline in choosing currency pair to trade news breakout

When choosing a currency pair to trade a news breakout, consider the following guidelines:

  1. Market volatility: Look for currency pairs with high volatility, as they tend to react more significantly to news events. You can use indicators like the Average True Range (ATR) or the Bollinger Bands to gauge volatility.
  2. News impact: Choose currency pairs that are likely to be affected by the news event. For example, if the news is related to a specific country or region, focus on currency pairs that involve that country or region.
  3. Market sentiment: Consider the current market sentiment and the potential impact of the news on the market. If the news is expected to be positive, look for currency pairs that are likely to benefit from the news. If the news is expected to be negative, look for currency pairs that are likely to be affected negatively.
  4. Currency pair correlation: Consider the correlation between the currency pair you're interested in and other currency pairs. If the currency pair you're interested in is highly correlated with another pair, it may be better to trade the correlated pair instead.
  5. Liquidity: Choose currency pairs with high liquidity, as they tend to have tighter spreads and more accurate price quotes. You can use the Liquidity Index or the Order Book Depth to gauge liquidity.
  6. Market hours: Consider the market hours when the news is expected to be released. If the news is released during a time when the market is less active, it may be more difficult to trade.
  7. Currency pair strength: Consider the strength of the currency pair you're interested in. If the pair is strong, it may be more likely to break out in response to news.
  8. News surprise: Consider the potential surprise factor of the news. If the news is expected to be positive, but the actual outcome is negative, the market may react more strongly.
  9. Currency pair momentum: Consider the momentum of the currency pair you're interested in. If the pair is trending strongly, it may be more likely to break out in response to news.
  10. Risk management: Always consider your risk management strategy when trading a news breakout. Set stop-losses and take-profits accordingly, and be prepared to adjust your position if the market moves against you.

Some popular currency pairs for trading news breakouts include:

Remember to always use proper risk management and to trade with caution when trading news breakouts.