News and Event-Based Strategies

News trading involves placing trades based on anticipated or actual economic and political events. These events often lead to sharp price moves, increased volatility, and volume spikes.

News Trading Styles

1. Pre-News Trading (Speculative Positioning)

• Enter: Before the news release
• Based on: Forecasts vs. consensus
• High risk: News could surprise and reverse

Example:

• If forecast for NFP is strong, you might buy USD pairs before the release

2. Post-News Trading (Confirmation-Based)

• Enter: After news is released
• Wait for: Directional breakout or momentum confirmation
• Lower risk: Avoids the initial volatility spike

Example:

• NFP beats expectations → wait for breakout candle → enter after pullback

3. Straddle Strategy

• Set two pending orders (buy stop and sell stop) just above/below key levels
• One order triggers after the news, the other is cancelled
• Useful for: High-impact news like NFP or rate hikes

Indicators for News Trading

• ATR (Average True Range): For volatility gauge
• Bollinger Bands: To spot volatility expansions
• Volume or Tick Charts: Confirm breakout strength
• MACD/RSI: For momentum confirmation (post-news trades)

News Trading Risks

• Slippage: Execution at worse prices than expected
• Spread widening: Broker spreads can jump 5–20x
• Whipsaws: Price fakes in one direction, then reverses
• System delays: News bots or HFTs can move price before you react

Pro Tips

• Use demo accounts to test before risking real capital
• Combine technical analysis with news for best timing
• Monitor real-time news feeds (Bloomberg, Reuters, or Twitter)
• Never trade major news blindly — plan and manage risk ahead

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