The market spends most of its time consolidating, but its most dramatic moves occur during high-impact news events. Volatility is a liquidity event—dangerous when guessed, powerful when planned. This lesson teaches you to survive the spike and ride the flow it creates with professional risk protocols.
Welcome to Lesson 70
The market consolidates for days, even weeks—then in 60 seconds, everything changes. A single Non-Farm Payrolls (NFP) release, a surprise interest rate decision, or an unexpected inflation print can move the market 200+ pips in minutes, dictating the trend for weeks to come.
These moments offer massive profit potential, but they carry unique and severe risks that can wipe out an entire month's worth of gains if handled incorrectly. Slippage, spread widening, and violent whipsaws are execution killers that don't respect your Stop Loss placement or your 1% Risk Rule.
Professional traders don't ignore the Economic Calendar—they plan for it. Trading around news isn't about guessing the outcome; it's about managing the volatility and exploiting the subsequent moves with disciplined risk management.
Key Principle: Trading the news release itself is speculation. Trading the flow created by the news is execution of your edge. There's a critical difference.
By mastering these tactics, you move beyond basic forex trading and adopt the disciplined approach of institutional traders who view volatility as a liquidity opportunity, not a random hazard.
Lesson Chapters
1Chapter 1: Understanding High-Impact Events⏱️ ~6 min
High-impact events are scheduled economic releases or central bank communications that cause an immediate, sharp reaction in the currency markets.
Primary High-Impact Events
These are the releases that professional traders mark in red on their Economic Calendar:
🗓️ Critical News Events by Category
Central Bank Decisions:
- Interest Rate Announcements (FOMC, ECB, BoE, BoJ, RBA)
- Monetary Policy Statements
- Press Conferences (Fed Chair, ECB President)
- Meeting Minutes (FOMC Minutes, ECB Accounts)
Employment Data:
- Non-Farm Payrolls (NFP) — USA, first Friday of month
- Unemployment Rate — USA
- Canadian Employment Change — Monthly
- ADP Employment Report — USA, mid-month
Inflation & Growth:
- Consumer Price Index (CPI) — Monthly inflation gauge
- Producer Price Index (PPI) — Wholesale inflation
- Gross Domestic Product (GDP) — Quarterly growth
- Retail Sales — Consumer spending indicator
Other Major Drivers:
- Trade Balance — Import/export data
- Manufacturing PMI — Industrial activity
- Consumer Confidence — Economic sentiment
- Initial Jobless Claims — Weekly unemployment
Use ForexFactory.com or Investing.com Economic Calendar. Filter for "High Impact" (red folder) events only. These are the releases that cause 50-200+ pip moves in seconds.
Unique Trading Risks
High-impact news creates a trading environment unlike any other market condition, primarily due to three execution killers:
Execution Risk (Slippage): During the announcement, liquidity momentarily evaporates. Your Stop Loss at 1.0820 might fill at 1.0795 (25 pips worse), turning your planned 1% risk into 1.8% instantly.
Volatility Risk (Whipsaws): Price often moves sharply in one direction, only to violently reverse and take out traders on both sides before settling on a final direction.
Spread Widening: Market Makers drastically increase spreads during news:
| Pair | Normal Spread | During NFP | Impact |
|---|---|---|---|
| EUR/USD | 0.5 - 1.0 pips | 5 - 15 pips | 10x wider |
| GBP/USD | 1.0 - 2.0 pips | 8 - 20 pips | 10x wider |
| USD/JPY | 0.5 - 1.0 pips | 4 - 12 pips | 8x wider |
Slippage can turn a controlled 1% risk into a 2-3% loss in volatile news seconds. This is why the Stay Flat protocol exists—it's risk management, not cowardice.
2Chapter 2: The "Stay Flat" Protocol⏱️ ~7 min
For the vast majority of traders, the most profitable tactic during high-impact news is avoidance. This must be a formal rule in your Personal Playbook.
The Core Rule: Define the "No Trade Zone"
🚫 Professional Stay-Flat Protocol
Rule Statement:
"I will not open any new trades and will aim to close all active positions 15 minutes before and 15 minutes after any scheduled High-Impact (Red Folder) news event for the currency pair I am trading."
Implementation Steps:
Step 1: Calendar Review (Sunday Evening)
- Review upcoming week's Economic Calendar
- Highlight ALL red-folder events affecting your traded pairs
- Set alerts 20 minutes before each event
Step 2: Pre-Event Action (15 Minutes Before)
- No new trade entries permitted
- Close all active positions if possible
- If position cannot be closed:
- Take partial profits (50-80% of position)
- Move remaining SL to break-even
- Accept risk-free outcome
Step 3: Event Period (During Release)
- Close trading platform or move to "view-only" mode
- Do not watch tick-by-tick price action (causes emotional reactions)
- Wait for confirmation period to end
Step 4: Post-Event Window (15 Minutes After)
- Market still digesting, spreads still wide
- No trades yet—wait for clear direction
- Continue monitoring for Post-News setup
Step 5: Re-Entry (After 15-Minute Window)
- Resume normal trading with Post-News Confirmation tactic
- Look for Market Structure Shifts
- Enter on clean pullbacks only
Why Avoidance Works
The Professional Reality:
- The first 5-30 seconds of a news release is dominated by High-Frequency Trading (HFT) algorithms
- These bots have direct data feeds and execute in microseconds
- They're positioned in the exchange's server rooms (colocation)
- Retail traders on home internet cannot compete with this speed advantage
What You're Avoiding:
- ❌ Random slippage (fills at unpredictable prices)
- ❌ Whipsaw reversals (stopped out on both sides)
- ❌ Spread widening (effective entry 10+ pips worse)
- ❌ Emotional decision-making (panic in fast markets)
- ❌ Broker requotes or rejected orders
What You're Preserving:
- ✅ Your capital for clear, high-probability setups
- ✅ Your emotional stability and decision-making clarity
- ✅ Your 1% Risk Rule integrity
- ✅ Your statistical edge (which doesn't exist in news gambling)
Think of the Stay Flat protocol as a seatbelt. You don't refuse to wear a seatbelt because you're a "good driver"—you wear it because external factors beyond your control create risk. News events are the market's equivalent of icy roads at night.
3Chapter 3: Pre-Positioning Strategy⏱️ ~8 min
A more advanced tactic is to pre-position a trade based on strong technical confluence before the news, but with rigorous risk control.
When to Consider Pre-Positioning
This tactic is only used when ALL of the following conditions align:
✅ Pre-Positioning Checklist
Clear Structural Setup (Technical):
- Price is at a major, high-timeframe structural level
- Weekly or Daily Order Block (OB)
- Large Fair Value Gap (FVG) on H4+
- Major liquidity pool level
Fundamental Alignment (Macro):
- The consensus expectation aligns with your technical direction
- Market is priced for a specific outcome
- Your trade benefits if consensus is correct OR if there's a surprise
Risk Capacity:
- You have mental/capital buffer to accept potential loss
- Position sizing allows for wider Stop Loss
- You can reduce risk to 0.5% or 0.25% comfortably
Execution Setup:
- You're using Limit Orders (not market orders)
- Your broker is ECN/STP with good news execution
- You have VPS or very low latency connection
If ANY condition is missing → Do NOT pre-position. Use Stay Flat instead.
The Pre-Positioning Protocol
Risk Scaling Rule:
Because of heightened risk, you must scale down your lot size.
Normal Trade:
- Risk: 1.0% of capital
- Stop Loss: 20-30 pips (typical technical level)
Pre-News Trade:
- Risk: 0.5% or 0.25% of capital
- Stop Loss: 40-60 pips (wider to survive whipsaw)
- Same lot size calculation, but with reduced risk %
Example Calculation:
| Account | Normal Risk | Pre-News Risk | SL Distance | Lot Size |
|---|---|---|---|---|
| $10,000 | $100 (1%) | $50 (0.5%) | 50 pips | 0.10 lots |
| $50,000 | $500 (1%) | $250 (0.5%) | 50 pips | 0.50 lots |
| $100,000 | $1,000 (1%) | $500 (0.5%) | 50 pips | 1.00 lot |
Real-World Example
📋 Pre-NFP Execution Plan
Setup:
- Currency Pair: EUR/USD
- Event: NFP in 10 minutes
- Technical: Price at Daily Order Block at 1.0850
- Fundamental: Market expects strong NFP (USD bullish)
Entry:
- Place Sell Limit at 1.0855 (top of Order Block)
Stop Loss:
- 1.0900 (50 pips above OB, beyond structural high)
Risk Sizing:
- Reduce risk to 0.5% of account
- Account: $20,000 → Risk: $100
- 50-pip SL → Lot size: 0.20 lots
Outcomes:
Scenario A: News Confirms
- EUR/USD drops 150 pips to 1.0700
- +$310 profit (3.1R)
Scenario B: News Surprises
- EUR/USD spikes to 1.0950
- SL fills at 1.0915 (15 pips slippage)
- -$150 loss (0.75% with slippage)
Critical Rule: Accept the potential for no fill or quick invalidation without revenge trading. Pre-positioning is a calculated bet with reduced stake, not a guaranteed winner.
4Chapter 4: Post-News Confirmation Trading⏱️ ~8 min
This is the preferred method for most professional traders: Wait for the volatility to settle, identify the new direction, then trade the sustained momentum.
The 15-Minute Rule
After the initial 15 minutes following the news release, several things happen:
- HFT algorithms complete their initial execution and step back
- Knee-jerk reactions from retail traders subside
- Institutional traders begin establishing positions
- True market direction starts to emerge
- Spreads normalize to near-regular levels
- Liquidity returns to the order book
This is when the professional edge appears.
The Post-News Confirmation Setup
📈 Professional Post-News Entry Protocol
Step 1: Identify Market Structure Shift (15+ Minutes After)
- Look at M15 or H1 timeframe
- Has price broken a significant swing high/low?
- Is there a clear MSS in the news direction?
- Example: Fed hikes rates → USD rallies → EUR/USD breaks below M15 swing low
Step 2: Map the Fresh Structure
- The news candle creates new Order Blocks
- Identify the fresh FVG left by the spike
- Mark the last swing before the move (becomes new OB)
Step 3: Wait for Pullback (Patience Required)
- DO NOT chase the initial move
- Wait for price to retrace into the newly created OB or FVG
- This is the "mitigation" of the imbalance
- Typically happens 30-90 minutes after the news
Step 4: Execute with Full Risk (1%)
- Now you're trading a confirmed technical setup
- The news has established the Order Flow direction
- You're entering at a discount/premium level
- Use your standard 1% Risk Rule
- Set TP at prior spike extremes or measured extensions
Step 5: Manage the Trade Normally
- Follow your standard Personal Playbook rules
- No different from any other OB/FVG trade
- Let your R:R ratio work
Real-World Example
🎯 Post-Rate Hike Trade
Event:
- Federal Reserve announces surprise 0.50% rate hike
- Time: 2:00 PM EST
Market Reaction:
- 2:00-2:05 PM: EUR/USD drops 100 pips to 1.0750
- 2:05-2:10 PM: Whipsaw +40 pips to 1.0790
- 2:10-2:15 PM: Continues down to 1.0730
- 2:15-2:30 PM: Pullback to 1.0760 (into FVG)
Your Execution:
2:00 PM: News released → Stay Flat
2:15 PM: Observe M15 chart
- Clear MSS to downside (broke 1.0780 swing low)
- Identified FVG: 1.0755 - 1.0770
- Wait for pullback
2:30 PM: Price pulls back to 1.0765
- Entry: Sell at 1.0765
- Stop Loss: 1.0785 (above FVG = 20 pips)
- Take Profit: 1.0700 (prior day low = 65 pips)
- Risk-Reward: 1:3.25
Position Sizing:
- Account: $10,000
- Risk: 1% = $100
- SL: 20 pips
- Lot Size: 0.50 lots
Outcome:
- Price respects FVG, continues down
- TP hit at 1.0700 over next 4 hours
- Profit: $325 (3.25R)
Why This Worked:
- ✅ Avoided initial volatility and slippage
- ✅ Waited for confirmed direction (MSS)
- ✅ Entered at technical discount (FVG mitigation)
- ✅ Used standard risk management (1%)
- ✅ Let institutional order flow work
The 15-minute rule is not arbitrary—it's based on how long it typically takes for HFT algorithms to complete strategies and for human institutional traders to begin placing larger directional orders.
5Chapter 5: Managing Execution Risks⏱️ ~5 min
Successful news trading is heavily dependent on the quality of your broker and your technical infrastructure.
A. Broker Type Matters
Not all brokers are created equal, especially during high-volatility periods.
ECN/STP Brokers (Recommended):
- Electronic Communication Network / Straight Through Processing
- Your orders go directly to liquidity providers (banks, institutions)
- Better execution during news (but still expect some spread widening)
- Transparent pricing (no conflict of interest)
- Examples: IC Markets, Pepperstone, FXCM Pro
Market Makers:
- Broker takes the opposite side of your trade
- May widen spreads dramatically during news
- Potential for requotes or rejected orders
- Some enforce "no trading during news" rules
- Can work fine for Stay Flat protocol
What to Check:
| Feature | Good Broker | Poor Broker |
|---|---|---|
| Spread During NFP | 3-5 pips (EUR/USD) | 15-30 pips |
| Slippage | ±2-3 pips average | ±10-20 pips |
| Order Rejection | Rare | Frequent during news |
| SL Execution | Within 5 pips | 10-30 pips away |
B. VPS (Virtual Private Server)
What It Is: A VPS is a virtual machine hosted in a data center near your broker's servers. Your trading platform runs 24/7 on this VPS.
🖥️ VPS Advantages During News Events
Latency Reduction:
- Home Internet: 50-200ms ping to broker
- VPS: 1-5ms ping to broker
- Impact: Faster order execution, less slippage
Reliability:
- No risk of home internet disconnection
- No power outages affecting open positions
- Platform runs 24/7 regardless of your availability
Execution Quality:
- Orders reach broker in milliseconds
- Critical during fast-moving news
- Reduces likelihood of requotes
Cost:
- $10-30 per month
- Worth it if trading news or running EAs
Recommended Providers:
- Forex VPS (optimized for MT4/MT5)
- Vultr, DigitalOcean (general VPS)
- Many brokers offer free VPS to active traders
C. Playbook Integration
Your Personal Playbook must explicitly state your news protocol:
📋 News Event Protocol (Playbook Insert)
News Trading Rules:
Stay-Flat Events:
- All red-folder events on Economic Calendar
- 15 minutes before to 15 minutes after
- No new entries, close or de-risk active positions
Pre-Positioning (Advanced Only):
- Only if at major HTF structure (Daily+ OB/FVG)
- Reduce risk to 0.5% maximum
- Wider SL beyond structural invalidation
- Limit orders only
Post-News Confirmation:
- Wait 15+ minutes for initial volatility to settle
- Require clear MSS on M15/H1
- Enter on pullback to news-created OB/FVG
- Resume full 1% risk
- Standard technical targets
Broker Requirements:
- ECN/STP account for lower spreads
- VPS hosting for low latency
- Monitor execution quality quarterly
Forbidden Actions:
- ❌ Never use market orders during news
- ❌ Never increase risk during news periods
- ❌ Never revenge trade after news stops you out
- ❌ Never trade news on exotic pairs
6Chapter 6: Summary, FAQs & Quiz⏱️ ~7 min
Summary & Conclusion
High-Impact News Events are moments of extreme volatility that test a trader's discipline and risk management.
Key Principles:
Key Principles (0/11)
Professional Mindset: You don't trade the news—you trade the Order Flow established by the news. The release itself is a liquidity event; the follow-through is your edge.
The market rewards patience, not prediction.
FAQs
Q: Is it possible to profit from trading the news release itself?
It is technically possible, but it is not a repeatable, professional strategy for retail traders.
Why it's difficult:
- HFT firms have microsecond execution speeds
- They pay for direct data feeds ($10,000+ per month)
- They use colocation (servers in exchange buildings)
- They execute trades in 0.001 seconds
The retail reality:
- Your news appears after 1-5 second delay
- Your broker adds another 0.5-2 second delay
- Your order execution takes 0.1-0.5 seconds
- Total delay: 2-7 seconds behind the HFT bots
Professional verdict: The risk of slippage and spread widening far outweighs potential reward, making direct news trading a low-probability gamble, not a statistical edge.
Q: What should I do if my Stop Loss gets significantly slipped during a news event?
Immediate Actions:
- Exit Immediately (if still open)
- Document the Trade (record slippage details)
- Do NOT Revenge Trade
- Review Broker Quality
- Adjust Playbook (reinforce Stay Flat rule)
Prevention is better than reaction: Follow the Stay Flat protocol religiously.
Q: If my open position is running with a large profit right before the news, should I close it?
Yes—professional risk management mandates securing capital.
Options:
Option A: Close Everything (Safest)
- Close 100% of position
- Lock in profit
- Zero exposure to news volatility
Option B: Partial Profit + Risk-Free (Balanced)
- Close 80% of position
- Move SL on remaining 20% to break-even
- Guaranteed profit, chance for more
Professional Rule:
"Always take the guaranteed profit over the gamble. You can always re-enter after confirmation."
Q: How far away should my Stop Loss be for a pre-news position?
For a pre-news entry, your Stop Loss must be placed beyond the nearest structural level plus 5-10 pip buffer for whipsaw spikes.
This will typically be 40-80 pips (much wider than normal 20-30). The wider distance is necessary to survive the initial whipsaw. Reduce lot size proportionally so the wider SL still risks only 0.5% of your capital.
Quiz: Trading Around News & Volatility Events
The primary execution risk for a trader during a high-impact news announcement is:
The professional 'Stay Flat' protocol requires a trader to cease opening new trades and manage open risk during which time window?
In the Post-News Confirmation Tactic, what is the trader waiting for before entering a trade?
When implementing a Pre-Positioning Strategy before news, the essential risk mitigation rule is to:
Call to Action
🚨 Stop gambling on the news. Start trading the flow it creates.
The difference between amateur and professional news trading is timing and protocol. Amateurs chase the spike. Professionals wait for the confirmation.
Your Next Steps:
- Review this week's Economic Calendar — Highlight all red-folder events
- Commit to the Stay Flat Protocol — Practice avoidance for the next month
- Observe, Don't Trade — Watch the volatility without trading it
- Enter Post-News Only — Use Post-News Confirmation exclusively
Master the discipline of waiting 15 minutes. Those 15 minutes are the difference between gambling and trading.
Ready to Practice News Trading Tactics Safely?
Apply the Stay Flat protocol and Post-News Confirmation strategy on a demo account first. Master the timing before risking real capital on volatile events.
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Remember: The market will always have news events. Your job is not to predict them—it's to survive them and exploit the Order Flow they create. Patience beats prediction every time.
Stay flat. Wait for confirmation. Execute with confidence.
Ready to continue?
Mark this lesson as complete to track your progress.