How to Trade News Events Without Getting Stopped Out!Hello Traders!
We’ve all been there—price spikes wildly during a news event, and before you know it, your stop-loss gets hit! Trading during high-impact news releases can be risky, but if done right, it can also present huge opportunities! Today, let's explore how to trade news events smartly without getting stopped out!
1. Why Do Markets React So Violently to News?
Liquidity Drops: When news hits, market makers pull orders, leading to sharp price swings.
Algorithmic Trading Kicks In: High-frequency trading (HFT) bots react within milliseconds, pushing price up and down quickly.
Stop-Loss Hunts: Big players often trigger retail traders’ stops before taking the real move in their direction.
Emotions Run High: Fear and greed cause overreactions, making the first move after news unreliable.
2. How to Avoid Getting Stopped Out?
Use a Wider Stop-Loss: During news events, spreads widen and price fluctuates rapidly. A tight stop-loss is an easy target!
Wait for the First Move to Fade: The first price movement after news is usually a liquidity grab —don’t chase it!
Check the Spread Before Entering: Brokers increase spreads during high-impact events. If spreads are too wide, wait!
Trade the Retest, Not the Initial Spike: After the first reaction, price often retests key levels before the actual move.
Use Pending Orders Strategically: Instead of market execution, place limit orders near support/resistance levels.
Monitor Market Sentiment: News impact isn’t just about the numbers—it’s about how traders interpret them.
3. Best Trading Strategies for News Events
The Straddle Strategy: Place buy-stop and sell-stop orders above and below key levels. When price breaks out, one order gets triggered. Cancel the other order immediately.
The Retest Entry: Let price spike, wait for a pullback to a strong support/resistance level, and enter the trade with confirmation.
The Fading Strategy: If price spikes too much in one direction, look for signs of exhaustion and trade in the opposite direction.
Avoid Trading Right at the News Release: Instead, wait for 5-10 minutes for market noise to settle.
Use Economic Calendars: Always know when news is coming! Sites like Forex Factory, Investing.com, and TradingView provide schedules of upcoming events.
4. Risk Management During News Trading
Trade Small Positions: News events are risky— reduce your lot size to manage volatility.
Use a Trailing Stop-Loss: This allows your trade to capture big moves while locking in profits.
Avoid Holding Overnight Before Major News: Gaps in price can wipe out stop-losses before the market even opens!
Watch for Fake Breakouts: Price might break a level, trap traders, and then reverse. Wait for confirmation before entering.
Conclusion
Trading news events can be highly profitable if you manage risk properly and don’t chase price movements! Instead of getting stopped out, use wider stops, enter after the first move settles, and follow a structured plan.
How do you trade news events? Share your experience in the comments!
