News events are the market's earthquakes—creating the biggest, fastest moves in seconds. But they're also chaotic, dangerous, and unpredictable. Professionals don't gamble on the number. They wait for the dust to settle, then trade the NEW reality with precision. Trade the consequences, not the chaos.
Welcome to This Lesson
You've mastered major economic indicators and central bank policy. Now comes the critical question: WHEN and HOW?
The News Trading Reality: A single number released in 0.1 seconds can move EUR/USD 150 pips in 3 minutes—the same distance that might take 3 DAYS during normal trading. This creates massive opportunity and massive risk. Most retail traders lose money on news because they treat it like normal trading. It's not.
Lesson Chapters
1Chapter 1: News Trading Defined⏱️ ~3 min
News trading is navigating the massive volatility spikes created by scheduled economic releases, central bank decisions, and geopolitical shocks.
The Double-Edged Sword
The Opportunity (Why Traders Are Attracted):
Speed: Normal day: EUR/USD moves 30-60 pips in 12 hours. NFP day: EUR/USD moves 120 pips in 15 minutes. Compression of opportunity.
Magnitude: Typical daily range: 50-80 pips. News day range: 150-250 pips. 3-5× normal volatility
Trend Clarity: Normal days: Choppy, unclear. Post-news: Strong, sustained trend with institutional conviction.
The Risk (Why Most Lose Money):
Spread Widening: Normal EUR/USD spread: 0.1-0.3 pips. During NFP: 3-10 pips. 10-30× wider spread
Slippage: Planned entry: 1.0900. Actual fill during chaos: 1.0893 (7 pips worse). Uncontrolled risk increase
Whipsaws & Stop Hunts: News releases create violent back-and-forth designed to take retail money.
The Statistics:
Traders active during news (8:25-8:35): 73% lost money, Average loss: -$187, Win rate: 27%
Traders who waited (entered 8:40+): 61% made money, Average profit: +$143, Win rate: 61%
Professional approach works.
The Professional Mindset Shift
Amateur Mindset: "NFP in 5 minutes! This is my chance for a BIG win!"
Professional Mindset: "NFP in 5 minutes. High risk, low edge environment. I'll protect capital and wait for clarity."
The New Goal: "My goal during news is NOT to capture the initial spike. My goal is to SURVIVE the chaos, OBSERVE the institutional direction, and EXECUTE on the clear post-news trend with controlled risk."
2Chapter 2: The Economic Calendar & Impact Hierarchy⏱️ ~4 min
The economic calendar is your early warning system—telling you WHEN and WHAT to prepare for.
Reading the Economic Calendar
Five Critical Fields:
Date & Time — Exact release moment (know down to the MINUTE)
Currency — USD, EUR, GBP, JPY (affects all pairs with that currency)
Event Name — Non-Farm Payrolls (NFP), Consumer Price Index (CPI), FOMC Interest Rate Decision, GDP
Impact Rating:
- 🔴 Red (High Impact): 100+ pip potential, Major trend shifts, Requires action
- 🟡 Yellow (Medium Impact): 30-70 pip potential, Moderate volatility
- 🟢 Green (Low Impact): 10-20 pip potential, Minor reaction
The Three Numbers:
- Previous: Last period's actual number (historical context)
- Forecast: Market expectation (CRITICAL: Market already priced this in)
- Actual: The real number released (THIS creates the surprise and move)
Daily Calendar Routine
Morning Routine (Before Market Open):
Step 1: Open Economic Calendar (ForexFactory.com, Investing.com)
Step 2: Filter for Today's date, Show only 🔴 High and 🟡 Medium impact
Step 3: Identify Red-Flag Events and critical windows
Step 4: Plan Your Trading Day — "Today I will close all EUR positions by 9:40 (before CPI). Not enter any USD trades 14:00-15:00 (NFP zone)."
High Impact Events (Red Flag 🔴)
The "Big Four" (Most Powerful):
Central Bank Interest Rate Decisions — FOMC, ECB, BOE, BOJ. Typical move: 100-300 pips. Duration: Days to weeks. THE most impactful events
Inflation Data (CPI) — Measures cost of living changes. Directly influences central bank policy. Typical move: 80-150 pips
Employment Data (NFP) — Non-Farm Payrolls. Most volatile single data point. Typical move: 100-200 pips in 30 minutes
GDP (Economic Growth) — Quarterly. Measures total economic output. Typical move: 60-120 pips
How to Handle Red Flags: The 30-Minute Rule: 15 min before: Review positions, 10 min before: Close or move to breakeven, 5 min before: NO new entries. After release: 0-15 min: Watch only (chaos), 15-30 min: Observe structure, 30+ min: Consider post-news entries. FLAT during chaos
3Chapter 3: The Surprise Factor & Trading Approaches⏱️ ~5 min
Markets don't move on the number itself—they move on the DEVIATION from expectations.
Understanding Market Pricing
The Key Principle: "Markets price in the Forecast BEFORE the release. They only move if the Actual number surprises."
The Math of Surprise: Surprise Index = (Actual - Forecast) / Forecast
Rule of thumb:
- < 5% surprise: Minimal move (20-30 pips)
- 5-15% surprise: Moderate (50-80 pips)
- > 15% surprise: Major (100-200+ pips)
Three Approaches to News Trading
Approach #1: Avoidance (Beginner-Recommended)
Philosophy: "I have NO edge on predicting the number. I have NO edge during the chaos. I WILL have an edge on the post-news trend. Therefore, I wait."
The Protocol:
- 15 minutes before: Review all open positions
- 10 minutes before: Close all positions OR move ALL SL to breakeven
- 5 minutes before: NO new entries
- 0-15 min after: Watch only (DO NOT TRADE)
- 15-30 min after: Observe structure forming
- 30+ min after: Enter on pullback to new structure
Pros: Zero slippage risk, Zero emotional stress, Higher win rate (60-70% post-news). Safe, professional, effective
Approach #2: Post-News Trend (Preferred by Technical Traders)
Wait for first M15/M30 candle to CLOSE after news. Identify direction. Mark key levels. Wait for pullback. Enter with structure.
Approach #3: Straddle/Breakout (Expert Only)
Bracket pre-news range with stop orders. Win rate: 22% clean, 58% whipsaw. NEGATIVE expectancy for retail—AVOID
4Chapter 4: Summary & Quiz⏱️ ~4 min
Summary
News events are the market's highest-velocity moments—creating massive opportunity and equally massive risk.
Key Principles (0/7)
Professional Truth: The best news traders DON'T trade the news. They trade the CONSEQUENCE of the news after the chaos clears. The initial spike is for algorithms. The trend that follows is for disciplined traders with defined structure. Your edge isn't in the number—it's in the reaction AFTER the number.
Quiz
The primary purpose of checking the economic calendar before each trading session is to:
In news trading, the most significant price movement is typically caused by:
The safest approach for a beginner trader when a red-flag news event is scheduled is to:
When a market order is filled at a significantly worse price than requested during a news event, this is professionally termed:
Call to Action
🚀 Stop gambling on the number. Start trading the structure AFTER the number.
Call to Action
Manage a book, not a bet. Make correlation checks and risk caps part of your routine.
Deriv
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XM
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Remember: The traders who make money on news DON'T trade the news itself—they trade the consequence. Your edge is patience, not prediction.
Trade the consequence, not the chaos. Structure over speculation. Always.
Prerequisites
Before studying this lesson, ensure you've completed:
Ready to master news trading? Learn to trade the consequences, not the chaos.
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