Educational content only, not financial advice. Trading forex and CFDs on margin carries a high risk of loss and is not suitable for everyone.
Economic news releases are some of the biggest short-term drivers of currency prices. This week alone, traders have dealt with the Reserve Bank of Australia’s rate hike, eurozone inflation hitting 4.0%, the Bank of England’s decision and the US jobs report. News can create big opportunities, but it is also where many traders take their largest losses.
Why News Moves Markets
Currencies are priced on expectations. Before a release, the market already “prices in” the forecast. What moves price is the surprise, the gap between the actual number and what was expected. A strong number that was fully expected can cause little reaction, while a small miss can cause a sharp move. Read more in How to Read an Economic Calendar Like a Trader.
The Biggest Market Movers
- Central bank rate decisions and press conferences (Fed, ECB, BoE, BoJ)
- Inflation data (CPI)
- Jobs reports, especially US Non-Farm Payrolls
- GDP and PMI business surveys
The Risks of Trading the Release
- Spreads widen: the gap between buy and sell prices can jump to many times its normal size.
- Slippage: your order may be filled at a much worse price than you expected.
- Whipsaws: price can spike one way, then reverse within seconds, hitting stops on both sides.
Three Safer Approaches
1. Stay out and protect your positions
The simplest approach is to avoid opening new trades in the minutes before and after high-impact news. If you already have a position, decide in advance whether to close it, reduce it or keep it with a stop in place.
2. Trade the reaction, not the release
Wait 15–30 minutes after the release for the first spike to settle. Then look for price to break or hold a key level in the direction of the surprise. You give up the first part of the move, but trade in calmer conditions with clearer information.
3. Trade the bigger theme
Use news to shape your directional bias instead of trading the release itself. For example, if inflation keeps surprising higher and a central bank is signaling more hikes, that currency may be favored over the following days and weeks. Then use a trend-following approach to time entries.
A Pre-News Checklist
- Check the calendar for the time, forecast and previous figure.
- Know which pairs will be affected.
- Decide your plan for each outcome (better, worse or in line with expectations) before the release.
- Reduce position size. Many traders cut size by half or more around major news.
- Never trade news without a stop-loss.
See what’s coming up next in our Economic Calendar: Key Events for November 9–13.
Risk Reminder
No strategy wins every time. Test any approach on a demo account first, risk only a small percentage of your account on each trade, and read our Risk Management guide before trading live.