The Forex market, the largest financial market in the world, reacts to news at all times. In such a situation, “news trading” is a strategy in which traders make short-term or medium-term trades on the arrival of economic or political news.
In this blog, we will explain:
- What is news trading?
- Which news has the most impact?
- How is news trading done?
- What are the risks and rewards?
- Real-life examples
What is news trading?
News trading is a strategy in which a trader trades before or after the arrival of specific economic or political news.
This strategy is short-term – such as:
- Between 1 minute and 15minute
- Sometimes swing trades can also occur
What is high impact news?
There are certain news events that have a huge impact on the Forex market – they are called “high impact news”.
Traders closely monitor these events because they can cause sharp price movements in currency pairs within minutes or even seconds of their release.
List of high impact news:
| News Event | Impact |
| NFP (Non-Farm Payroll – US) | high volatility on USD pairs |
| FOMC Statement / Rate Hike | Interest rate → USD move |
| CPI (Inflation Data) | Rate hike signals are given |
| GDP (Gross Domestic Product) | Economic Strength Indicator |
| Interest Rate Decisions | Central bank policy signals |
| Unemployment Rate | Economy health signal |
| Retail Sales | Consumer spending insights |
| Central Bank Speech (Fed, ECB) | Direct impact on currency pairs |
How to identify high impact news?
You need to look at the daily forex calendar. Free Tools:
Check this in the Forex Calendar:
- Red Folder → High Impact
- Yellow Folder → Medium
- Gray Folder → Low
✅ Focus only on red-folder news
When should I trade?
1. Before the news
You can predict what the news will do – it is risky. Expert level strategy.
2. After the news (safe approach)
Enter immediately after the news when the direction of the market is clear.
Example:
- NFP came in and is better than expected
- US Dollar strengthened
- You buy dollars after confirmation
How to build a news trading strategy?
🔹 Step-by-step guide:
- Check the calendar:
Which currency pairs had high impact news yesterday or today?
- Setup Chart:
Use 5M / 15M chart, draw support-resistance
- Wait for news release:
Watch news data at the right time
- Wait after spike:
Volatility is very high in the first 2-5 minutes, wait
- Take entry after confirmation:
Trade after direction is clear
- Set stop loss and take profit
Keep SL high (25-50 pips), TP should also be the same or higher
What is the risk in news trading?
- High volatility → SL can be easily affected
- Slippage → Order delays can occur
- Whipsaw movement → Price can go both ways
- False spikes → Price suddenly reverses after news
Tips to reduce risk:
- Keep lot size small
- Trade only major news
- Keep risk fixed (max 1-2%)
- Wait for the market to stabilize
News Trading Tools
| Tool Name | Use |
| Forex Factory | Calendar & consensus |
| Investing.com App | Instant alerts |
| TradingView | Chart setup + economic events |
❓ F A Q
Question 1: Is news trading for beginners?
Answer: No. It can be risky for beginners. Practice on a demo account.
Question 2: Can robots or EAs do news trading?
Answer: Yes, but there are problems with slippage and spreads. Manual control is better.
Question 3: Is it worth taking a position before the news?
Answer: Only if you have strong conviction. Otherwise, wait and trade is safe.
✅ Conclusion
News trading is a high reward but high risk strategy. If you:
- Check the calendar regularly
- Control your risk
- And wait patiently for the market
Then you can make good profits in the short term.
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