Do you trade EURJPY on news days at all?

[LondonScalper]

EURJPY has become my problem child on news days, and I'm genuinely undecided whether to drop it from my roster on those days completely.

On a normal London morning I like it. It moves more than EURUSD, the spread on my raw account during 08:00 to 11:00 averages about 0.7 pips, and when the euro and yen agree on direction it trends cleanly for an hour.

On news days it's two pairs reacting to two calendars, plus the dollar moving both legs indirectly. A US release at 13:30 moves USDJPY sharply, which then drags EURJPY even though nothing in Europe or Japan has changed. A German number moves the euro side. And then there's the possibility of Japanese official comments, which can arrive any time.

I went through my log. On days with a tier one US release, my EURJPY trades after 12:00 London have a negative average: 23 trades, down about 31 pips in total, with four big losers doing most of the damage. On days with no tier one US news the same pair is my third-best performer.

So the easy answer is: no EURJPY after midday on US data days. But I don't want to create a rule from 23 trades and four outliers.

I'm leaning towards trading it only before 12:00 on those days, at smaller size. Does anyone here simply drop the yen crosses on US data days?

[Shadow Trader]

The 23 trades and four outliers point is the crux, so I sketched what that kind of record looks like: the chart is an illustration with synthetic numbers matching your totals, down 31 pips overall, with the four big losers all around 13:30.

img_13037.png (76.56 KiB) Viewed 31 times

Take those four out and the same pair is up about 9 pips over the other 19 trades. So the question isn't whether EURJPY is bad after midday. It's whether you were holding it through the US release.

If all four big losers were open at 13:30, the rule might simply be: flat on yen crosses from 13:15 to 13:45 on tier one US days, and normal trading either side. That keeps more of the pair than cutting it after 12:00.

I'd check the entry times on those four before deciding anything. If they were entries taken after the release, chasing the move, that's a different problem from being caught holding.

One edge case: some US releases at 15:00 London, ISM for example, move USDJPY almost as much. Do you count those as tier one in your split?

[Fairman]

On days with a tier one US release, my EURJPY trades after 12:00 London have a negative average

Before dropping it, it might be worth checking what the four big losers have in common, because 23 trades where four do most of the damage is really a sample of four. If they were all open across 13:30, or entered within a few minutes after it, the problem may be timing rather than the pair, and a rule like no EURJPY from 13:15 to 14:00 on US data days could keep the good part. You'd test that by removing the trades that overlapped the release and seeing whether the rest is positive. If instead the losers are spread through the afternoon, then it's the two-legs problem you describe, USDJPY dragging the cross around after the data, and dropping it on those afternoons makes sense. Either way 23 trades can't prove much, so the cheaper rule is the one to try first.

[Shadow Trader]

Even if you keep EURJPY on US data days, I don't think the stop can stay the same size. In my log the 30 minute range in the afternoon on those days is usually 1.5 to 2 times the morning one, so a stop that fits 09:00 is inside the noise by 14:00.

The attached illustration shows that with made up numbers for ten data days: every morning bar sits under a fixed 8 pip stop, and every afternoon bar is above it. That gap is where my instant stop outs came from.

img_13037_r2.png (66.12 KiB) Viewed 21 times

I tried scaling stop and target by the 30 minute ATR at entry, for the crosses only. Stop outs dropped a lot, but size has to come down to keep the same risk, so total profit barely moved.

Where it helped was the psychology. Fewer instant stop outs meant fewer revenge entries, and on these afternoons that was where my real losses came from.

On the Japanese official comments risk, I also check where USDJPY sits. If it's near levels where intervention has been talked about in the news, I treat every yen cross as unpredictable for the day. Do you keep EURUSD as the news day alternative, or just trade less?