News Trading Strategies
Economic news releases and breaking events create the biggest and fastest price movements in forex.
High-Impact Events
Tier 1 Events
- Non-Farm Payrolls (NFP)
- Federal Reserve Rate Decisions
- CPI (Inflation Data)
- GDP Reports
- Can move markets 50-200+ pips
Tier 2 Events
- Retail Sales
- PMI Data
- Employment Change
- Consumer Confidence
- Moves of 20-50 pips typical
News Trading Strategies
Straddle Strategy
- Place buy stop above and sell stop below current price
- Set both 15-30 pips from current price
- Set stop loss 20 pips on each order
- Wait for news release
- One side triggers, cancel the other
Fade the Spike
- Wait for initial news reaction
- Let the spike extend for 5-15 minutes
- Look for reversal candlestick
- Enter against the spike direction
- Target: 50% retrace of the spike
Post-News Trend
- Wait 15-30 minutes after release
- Let initial volatility settle
- Identify the established direction
- Enter in direction of the move
- This is the safest news trading approach
Preparation Checklist
Before the Event
- Know exact release time
- Understand market expectations (forecast)
- Check previous reading
- Identify key support and resistance
- Reduce existing position sizes
During the Event
- Spreads widen significantly
- Slippage is common
- Do not chase the move
- Wait for your setup
After the Event
- Compare actual vs forecast
- Positive surprise = currency strength
- Negative surprise = currency weakness
- Actual vs forecast matters more than absolute number
Risk Management
Critical Rules
- Never risk more than 1% on news trades
- Accept that stops may slip
- Spreads can triple or more during news
- Some brokers restrict trading around news
NFP Trading Example
- Check forecast vs previous
- Wait for 8:30 AM ET release
- Watch initial reaction (do not trade yet)
- Wait for first 15-minute candle close
- Enter in direction of momentum
- Stop below the reaction low
Key Takeaways
- Know the economic calendar
- Preparation is more important than reaction
- Post-news trading is safest
- Spreads and slippage are real costs
- Practice on demo before trading live news