An event-driven strategy mostly relies on non-market data such as economic or political news. We already considered the impact of these events on the market price (see Lesson 6, Basics of Fundamental Analysis and Its Possible Use in FX Trading). So, an event-driven strategy can attempt to enter when significant news hits the market and exit soon after.
The problem with strategies of this kind was also considered in detail in the same lesson: due to insufficient liquidity around the time of a news release, the price may jump in virtually any direction at an arbitrary distance, so you have no chance to place a trade at the desired price. At the same time, the return of liquidity may drive the price in the opposite direction, completely eliminating the potential for a profit in a few minutes (see Lesson 6 again for an example with the British pound and the release of the UK’s GDP figures).
I can confirm that profitable news traders used to exist in the early 2000s, but it has been really hard to make this trading consistent after 2010. So, we are not going to use non-price information in our strategies for any purpose other than, probably, stopping the execution of the strategy before potentially high-impact news.
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