News events can move markets dramatically in seconds. Trading them requires preparation, discipline, and risk management.
High-Impact News Events
| Event | Schedule | Typical Move |
|---|
| Federal Reserve rate decision | 8 times/year | 0.5-2% |
| Non-farm payrolls (NFP) | First Friday monthly | 0.5-1.5% |
| CPI inflation data | Monthly | 0.5-1% |
| GDP data | Quarterly | 0.3-1% |
| Central bank minutes | 2-3 weeks after decision | 0.3-0.8% |
| Earnings reports | Quarterly | 3-10% (per stock) |
| Crypto-specific events | Irregular | 5-30% |
Before the Event
Check the Calendar
- Economic calendar (ForexFactory, Investing.com)
- Crypto event calendar (CoinMarketCal)
- Earnings calendar (company websites)
Know Expectations
| Data Point | What to Know |
|---|
| Previous value | What happened last time |
| Forecast | What’s expected |
| Deviation potential | Will actual differ significantly? |
Size Your Position
| Risk Level | Position Size |
|---|
| Normal trading | 1-2% of capital |
| News trading | 0.5-1% of capital |
| Crypto news | 0.25-0.5% of capital |
During the Event
The Spike Pattern
- Initial spike in one direction (often fake)
- Reversal in the real direction
- Secondary move as algos and late traders enter
Don’t trade the initial spike. Wait 15-30 seconds for the real direction.
The Three Approaches
| Approach | Description | Risk |
|---|
| Pre-position | Enter before the news | Gap risk, wrong direction |
| Immediate entry | Enter on the spike | Whipsaw risk |
| Wait and confirm | Wait 15-60 minutes | Misses initial move |
Wait and confirm is safest. The initial spike often reverses.
After the Event
Let Volatility Settle
- News creates noise for 30 minutes to 2 hours
- Don’t make trading decisions during this period
- Let price find a new equilibrium
Identify the New Trend
| Reaction | Meaning |
|---|
| Price holds new level | The news mattered |
| Price returns to pre-news level | The news was noise |
| Price spikes both ways | Confusion, stay out |
Crypto-Specific News Events
Crypto news can move markets at any time:
| News Type | Typical Reaction |
|---|
| Exchange hack | Immediate -10% to -30% |
| Regulatory announcement | 5-20% move |
| ETF approval/rejection | 10-30% move |
| Major protocol upgrade | 5-15% move |
| Influencer/celebrity tweet | Temporary 5-10% pump |
Crypto moves faster and further than traditional markets. Position size smaller.
Risk Management
| Rule | Why |
|---|
| Always use stop-losses | Slippage is real during news |
| Reduce position size | 50% of normal size |
| Don’t add to losers | News trades are binary |
| No leverage > 3x | Liquidation risk spikes |
| Stay out of illiquid pairs | Price can gap through stops |
Slippage During News
| Market | Typical Slippage | During News |
|---|
| Forex (EUR/USD) | 0.1 pips | 3-10 pips |
| Crypto (BTC) | $5-10 | $50-500 |
| Stocks (large cap) | $0.01 | $0.10-0.50 |
Stops can fill significantly worse than expected. Use limit orders where possible.
The Best Strategy: Sit Out
The safest strategy is to close positions before high-impact news and wait 30-60 minutes after before entering new trades.
| If You… | Do This |
|---|
| Are a beginner | Close all positions before news |
| Have been trading < 1 year | Watch but don’t trade |
| Have 1-3 years experience | Trade small (25% normal size) |
| Have 3+ years experience | Trade with strict risk limits |
Bottom Line
News events create opportunity and danger. The biggest mistake is trading the initial spike. Wait for confirmation, reduce position size, and always use stops. For most traders, sitting out during news and entering after volatility settles is the most profitable approach.
This content is for educational purposes only. Not financial advice. Do your own research before investing.