How Do You Trade Around Economic News?

My question is in regards to Economic News with a definite time table that can be followed on an Economic Calendar.

How do you trade around such news? For example today at 8:30 am the Non-Farm Payrolls came out worst than expected causing a downward spike in the USD.

I trade the USD/JPY pair and usually set a trailing loss of 20 pips before major Economic News comes out. I figure if I’m wrong it will cost me only 20 pips in the direction I’m betting, but if I’m right I stand to gain more.

Is this correct approach? Or am I better off just not having a position when Economic News is about to be announced? For the more experienced traders out there, how do you handle Economic News?

Quick search of the forums threw up this.

IMO it depends on the report and the pair you’re trading. For example, putting a 20-pip stop on a yen pair during the NFP report is just asking for a fakeout. Maybe it would help if you study the pair’s previous price action in the previous releases and then calculating probabilities for the next one. :slight_smile:

Echonomic is good for forex. Forex market change during the economic news! Some news works 30-45 mins after publishing the news. And few people don’t trade during the news!

Thanks :slight_smile:

I think trading based upon the economic calendar is definitely, a good strategy if you can utilise news agencies such as Reuters news and analytics to predict currency movements based on economic news.

I just try to close all my positions 12 to 8 hours before the news, or at the very least I utilize trailing stops. I don’t open new positions before I’ve seen what the results of those news are.

If your goal is long-term (i.e. 200 pips and more) you don’t have to worry about news, but you should keep an eye on them. If your goals are less than that, maybe you should avoid trading around news altogether.

For me and many others I believe it is best to stay away of the news releases. No matter what the news will say you wont know which way the market will go

Hello Infinity Complex,
as per my personal experience, news can add lot of gains to your account while it can also wipe your account off. i have traded news many times and suffered losses as well as what i anticipated to be the outcome, it came out to be opposite of that. lets say the ECB December meet, most of the expectations were that ECB would come up with more easing measure while what it did was introduced very less easing measure which surely worked out against euro bears. even i was also one of them i had a short position at time anticipating the same but the outcome literally wiped out my account as my stop loss got hit even i placed it so far. so it kind of works like this the outcome can be completely different from what you anticipated, so if you want to trade news i advice you to place your stop loss at the major level 20 pips is kind of very vulnerable according to me.

Your approach is not wrong; many traders do this during economic news time. Personally I prefer to stay out of trading during news time; let it go the spikes. Watch the news result; then wait for price correction and then jump on trade with news derection.

Keep in mind that the economic information you are exposed to is also accessible to anyone else in the world. So reading the economic calendar or watching Bloomberg doesn’t really give you an edge over others. Trading during news is very speculative and it might be wiser to stay out of the market. Be patience and let the market go crazy. Then you will very often have opportunities to get in at better prices, taking advantages of extreme levels and market corrections.

Today’s wild swing on EurUsd is a prime example of why not to try trading the news

I get out of any trades just prior to a High volatily eurusd news event and get back in when the lunatics went to the bar to either celebrate or cry.

If you understand the impact of the news, it is a very good way to gain profit.
If not, I suggest close all your trades!!! Start trading after the news impact is over.