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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