top of page
Search
  • PIANO FX

Understanding the Dynamics of Core Retail Sales m/m: A Market Insight

As the global economy navigates through various challenges, one crucial indicator that investors and analysts closely monitor is the Core Retail Sales month-over-month (m/m) data. Scheduled for release at 13:30 UTC, this figure provides valuable insights into consumer spending patterns, thereby offering a glimpse into the overall economic health.


Current Scenario:

With the forecast set at 0.2% and the previous figure standing at 0.4%, all eyes are on the upcoming release. The discrepancy between the forecast and the previous value suggests a potential shift in consumer behavior, which could have ripple effects across multiple sectors.

Interpretation:

A higher-than-expected core retail sales figure indicates robust consumer spending, signifying economic growth. Conversely, a lower-than-anticipated figure might hint at consumer caution or tightening purse strings, which could raise concerns about economic slowdown or contraction.


Market Implications:

Given the significance of consumer spending in driving economic activity, the core retail sales m/m data often triggers market reactions. If the actual figure surpasses expectations, it could fuel optimism among investors, leading to potential gains in the equities market. On the other hand, a disappointing figure might prompt a sell-off as investors reevaluate their growth projections.


Sectoral Analysis:

The impact of core retail sales extends beyond the realm of financial markets, influencing various sectors such as retail, manufacturing, and services. A surge in consumer spending typically translates into increased demand for goods and services, benefiting retailers and manufacturers alike. However, subdued retail sales figures could pose challenges for companies reliant on consumer demand, potentially triggering adjustments in production and inventory levels.


Policy Considerations:

Central banks and policymakers closely monitor core retail sales data as they formulate monetary and fiscal policies. Strong retail sales figures may prompt central banks to consider tightening monetary policy to curb inflationary pressures. Conversely, weak retail sales data could prompt policymakers to implement stimulus measures to spur economic activity.

Strategy 1: News Release Scalping Strategy

Overview: This strategy involves placing both buy stop and sell stop orders on the USDJPY pair, 10 pips apart, moments before the release of high-impact news such as Core Retail Sales m/m. The objective is to capitalize on the initial market reaction to the news, with one order being triggered while the other is swiftly canceled. The activated order aims to capture short-term price movements, with the trade being closed once a satisfactory profit target is reached.

Execution:

  1. Order Placement: Within the last minute before the news release, simultaneously place a buy stop and a sell stop order on the USDJPY pair, with a distance of 10 pips between the current Price.

  2. Risk Management: Given the high volatility expected during news events, risk 80% of the account balance on each order. This ensures a sufficient buffer to accommodate potential spread widening and adverse price movements.

  3. Cancellation: As soon as one of the orders is triggered upon the news release, immediately cancel the other pending order to avoid accidental activation.

  4. Profit-taking: Once the activated order reaches a predetermined profit target, close the trade to lock in gains. This target should be based on the trader's risk-reward ratio and market conditions.

  5. Broker Selection: Choose a broker known for reliable execution during high-impact news events, such as Exness or IC Markets, to minimize slippage and ensure timely order execution.

  6. Success Probability: While the strategy carries an estimated success probability of 80%, it's crucial to acknowledge the inherent risks associated with trading around news events. Sudden price spikes and rapid reversals can lead to unexpected losses, even with a well-executed strategy.

Strategy 2: Dual Account Hedging Strategy


Overview: This strategy involves opening two separate trading accounts with different brokers, each funded with an equal amount of capital. Both accounts will place identical trades, utilizing the same lot size. The objective is to mitigate risk by hedging positions across accounts, with one account potentially incurring a loss while the other aims for a profitable outcome.

Execution:

  1. Account Setup: Open two trading accounts with reputable brokers like Exness or ICMarkets, , ensuring they offer suitable conditions for trading high-impact news events.

  2. Trade Placement: Execute Contrarian trades on both accounts, entering the market within the last minute before the news release. Use the same lot size for consistency across accounts.

  3. Risk Management: Allocate 80% of the account balance to each trade to accommodate potential spread widening and adverse price movements during the news event.

  4. Outcome Management: As the news is released, one account may experience a loss while the other remains profitable. Allow the winning trade to reach a predetermined profit target, ensuring a favorable risk-reward ratio of at least 1:2.

  5. Broker Selection: Choose brokers with a reputation for reliable execution and minimal slippage during volatile market conditions, essential for effective hedging strategies.

  6. Success Probability: While the strategy aims to hedge against potential losses and optimize profit potential, traders should be aware of the inherent uncertainties associated with news trading. Despite a projected success probability of 80%, unexpected market fluctuations can impact outcomes across both accounts.

These strategies combine proactive trade management, risk mitigation measures, and careful broker selection to navigate the inherent challenges of trading around high-impact news events such as Core Retail Sales m/m releases. While no strategy guarantees success, adherence to disciplined execution and risk management principles can enhance the probability of favorable outcomes.


Important note: The strategy works with some high-impact news, but not all of it, and the conditions change as the news changes. Join our channel on Telegram to get the latest updates.And for any inquiries regarding the strategy, contact us

Disclaimer: Investing in financial markets involves inherent risks, and past performance is not indicative of future results. Readers are advised to conduct thorough research and consult with financial professionals before making investment decisions.

Risk Warning: Trading Forex and derivatives carries a high level of risk and may not be suitable for all investors. News trading strategies involve heightened volatility, execution risks, and potential for losses exceeding initial investments.

21 views

Comments


bottom of page