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Janet Yellen, the new Fed chairwoman, spoke on Tuesday, February 11, 2014 at 8:30 a.m. EST. When the Fed chair speaks, the market usually gets more volatile for several minutes. You can imagine how traders waited anxiously to see how her first public address would affect the markets.
How could you have traded Tuesday’s news event? Of course, we always recommend that you stay out of the markets when such substantial trading news events occur. However, we teach a free trading strategy that lets you trade these news events. See the video below. For this news event, we waited for two consecutive closing bars above the high of the volatile news bar. The second closing bar occurred at 11:15 a.m., which was our entry long. The proceeding 10 candles on the 5-min chart were bullish to our favor. The profit target, based on the current ATR value, was hit soon after for a total of +2 points ($100 x the amount of contracts you’re trading, excluding slippage and broker or exchange fees).
This video from May 1, 2012 will show you exactly how to take advantage of news events: