I trade forex predominantly from chart patterns as I have shown you in this course. However since the start of the financial crisis I have had to pay a lot more attention to the news. I read the financial broad sheets and check out up to the minute announcements on Forex Factory ‘s website.  Speech by a major politician can also cause rapid moves, so best practise is check the calendar before placing trades.

how to trade around newsIf I am already in a trade and news is due I will either move my stop to reduce my risk OR close the trade if I think it is likely to be volatile.

On the subject of stops, please note that they are NOT guaranteed and years ago I was unfortunate enough to be in a trade at NFP where price jumped over my stop and cost me an extra 80 pips which meant that whereas I had risked 3% on the trade I ended up losing over 20% of my account!

How to Trade Around The News

I do NOT trade the news per se. I wait for news to be released and wait for the dust to settle, THEN take a trade or not depending upon the result and more importantly the outcome.

Often there is an over reaction at a piece of news. Price races off in one direction only to stall and then race the other way. Forex often appears to be silly & illogical, none more so than the NFP news (Non Farm Payrolls- USA jobs news) which I never trade. On too many occasions I have seen price shoot up 100’s of pips only to fall back down and move 100’s in the opposite direction.

Sometimes news comes out that appears to be positive for a currency and yet price races in the opposite direction. I show an example in the video where positive Canadian news saw the value of the Canadian currency fall. So traders who dived in to a trade at the release anticipating a win, found that they had lost and are probably still scratching their heads. My best advice is follow my lead and wait:

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Trade Around Forex News