| Updated: September 12, 2025Trading the news – combining the proactive and reactive approaches
This lesson will cover the following
- A quick overview
- Steps a trader needs to follow for this strategy
As we mentioned in previous articles, both approaches have their drawbacks. Therefore, it is best for a trader to combine them. A trader may use a specific economic report to forecast other economic data, but if all the pieces of information do not indicate the same economic situation, the trader may lose confidence. Consequently, a trader may enter with 50% of his/her position before the key economic report is released. If the actual reading is in line with his/her interpretation and the market moves in his/her favour, the trader can make another entry with the remaining portion of the position after the news release. If the trader’s interpretation is incorrect and the market moves against him/her, the loss will be much smaller.
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What does a trader need to do?
Let us now discuss the steps that a trader needs to follow when implementing this combined strategy.
When going long:
the trader needs to enter the market with 50% of his/her position at least 20 minutes before the key economic data are released;
the trader needs to place a protective stop at least 10 pips below the low of the range, or at least 30 pips below his/her entry, whichever is nearer.
If the actual reading is in line with the trader’s expectations and favours his/her proactive strategy, he/she should do the following:
the trader needs to make another entry with the remaining portion of his/her position at least five minutes after the news release;
the trader needs to place a protective stop on his/her entire position at a distance of 40 pips below the second entry point and then trail it with the 20-day Simple Moving Average (SMA);
the trader needs to take profit on 50% of the position when the market moves in his/her favour by 40 pips;
the trader needs to trail the stop on the remaining portion of the position with the 20-day SMA.
When going short:
the trader needs to enter the market with 50% of his/her position at least 20 minutes before the key economic data are released;
the trader needs to place a protective stop at least 10 pips above the high of the range, or at least 30 pips below his/her entry, whichever is nearer.
If the actual reading is in line with the trader’s expectations and favours his/her proactive strategy, he/she should do the following:
the trader needs to make another entry with the remaining portion of his/her position at least five minutes after the news release;
the trader needs to place a protective stop on his/her entire position at a distance of 40 pips above the second entry point and then trail it with the 20-day SMA;
the trader needs to take profit on 50% of the position when the market moves in his/her favour by 40 pips;
the trader needs to trail the stop on the remaining portion of the position with the 20-day SMA.
If the actual reading differs from the trader’s expectations and does not favour his/her proactive strategy, no second market entry should be made, and the initial position should be closed.
Example
We again look at the UK jobless claims report, using the five-minute chart of GBP/USD. We make a long entry with 50% of our position 20 minutes before the official report is released. The entry point is at 1.6758, while our protective stop is 10 pips below the range low, at 1.6737. Five minutes after the official release, we make another long entry with the remaining 50% of the position at 1.6783. The protective stop for the entire position is then moved to 40 pips below the second entry point, at 1.6743. We sell 50% of our position at a distance of 40 pips from the second entry point, at 1.6823 (this occurs at 09:50 GMT+3 on the next trading day). Next, we trail the stop on the remaining portion of the position with the 20-day SMA and exit when the price moves back below the moving average. This occurs at 11:15 GMT+3 at 1.6821. The total profit on our trade is 65 pips (1.6823-1.6758) + 38 pips (1.6821-1.6783), or 103 pips, while the average profit is 51.5 pips.
