This article written by Dr. Stefan Friedrichowski and Christian Stern was originally published in the September 2014 issue of Traders' Magazine.
Traders always search for volatility – there is even a dependency of it, because without market movements you will not earn profits. Around the time of the publication of important economic news the stock markets often show erratic movements in many underlyings. We show you how to use these movements successfully with an example of EUR/USD.
The Trading Idea There are days when prices only move in slow-motion – there are only sideways phases and many false breakouts. But then there are days where everything changes: dynamic breakouts up or down, sometimes even to both sides within minutes. These events can take place completely unplanned (for example because of attacks, riots, natural disasters) or predictably at big news-events like the publication of the gross domestic product (GDP) or the NFP-data (non-farm payrolls) or a press conference of the Fed. Dynamic price movements take place, but you know the date and time in advance. We want to introduce a trading idea based on the monthly ECB-interest rate decision and we want to show that we can recognise a mathematical probability advantage and use it for a real profit.
An old saying goes: “Close your trades prior to important news or at least protect them with a stop-loss.”
This is absolutely true. There may be some insiders who know in advance what will be published, but the reaction of the market is hard to predict. For example nonfarm payroll data is published and they are better than expected, which should mean a bullish move. But maybe because of this the market fears that the monetary measures will be reduced and therefore the DAX drops 100 points. In hindsight we can always explain the “Why”. But to be honest, this could be an explanation for the contrary as well. The consequence is clear: Stay still and close open positions – unless you want to trade the news systematically.
- Dr. Stefan Friedrichowski is physicist and full-time trader and manages the scientific work and the development of trading strategies and Christian Stern is full-time trader and heads the treasury and the education department at Trading Stars.
Traders always search for volatility – there is even a dependency of it, because without market movements you will not earn profits. Around the time of the publication of important economic news the stock markets often show erratic movements in many underlyings. We show you how to use these movements successfully with an example of EUR/USD.
The Trading Idea There are days when prices only move in slow-motion – there are only sideways phases and many false breakouts. But then there are days where everything changes: dynamic breakouts up or down, sometimes even to both sides within minutes. These events can take place completely unplanned (for example because of attacks, riots, natural disasters) or predictably at big news-events like the publication of the gross domestic product (GDP) or the NFP-data (non-farm payrolls) or a press conference of the Fed. Dynamic price movements take place, but you know the date and time in advance. We want to introduce a trading idea based on the monthly ECB-interest rate decision and we want to show that we can recognise a mathematical probability advantage and use it for a real profit.
An old saying goes: “Close your trades prior to important news or at least protect them with a stop-loss.”
This is absolutely true. There may be some insiders who know in advance what will be published, but the reaction of the market is hard to predict. For example nonfarm payroll data is published and they are better than expected, which should mean a bullish move. But maybe because of this the market fears that the monetary measures will be reduced and therefore the DAX drops 100 points. In hindsight we can always explain the “Why”. But to be honest, this could be an explanation for the contrary as well. The consequence is clear: Stay still and close open positions – unless you want to trade the news systematically.
Editors’ Picks
EUR/USD struggles below 1.1750 as 2025 draws to a close
EUR/USD struggles below 1.1750 in the European session on Wednesday, the final day of 2025. The pair is under pressure as the US Dollar edges higher despite Federal Open Market Committee (FOMC) Minutes of the December policy meeting, released on Tuesday, showing that most policymakers stressed the need for further interest rate cuts.
GBP/USD stays weak near 1.3450 amid renewed USD demand
GBP/USD remains under pressure near 1.3450 in European trading on Wednesday. The US Dollar finds fresh demand due to the end-of-the-year position adjustments, weighing on the pair amid the pre-New Year trading lull.
USD/JPY rises to near 156.60 as US Dollar Index refreshes weekly high
The USD/JPY pair trades 0.2% higher to near 156.60 during the late Asian trading session on Wednesday. The pair gains as the US Dollar trades higher, following the release of the Federal Open Market Committee minutes of the December policy meeting showed on Tuesday.
Editors’ Picks
EUR/USD struggles below 1.1750 as 2025 draws to a close
EUR/USD struggles below 1.1750 in the European session on Wednesday, the final day of 2025. The pair is under pressure as the US Dollar edges higher despite Federal Open Market Committee (FOMC) Minutes of the December policy meeting, released on Tuesday, showing that most policymakers stressed the need for further interest rate cuts.
GBP/USD stays weak near 1.3450 amid renewed USD demand
GBP/USD remains under pressure near 1.3450 in European trading on Wednesday. The US Dollar finds fresh demand due to the end-of-the-year position adjustments, weighing on the pair amid the pre-New Year trading lull.
Gold recovers losses above $4,300 amid the year-end grind
Gold price reverses a dip below $4,300 in the European trading hours on Wednesday, recovering intraday losses. The precious metal draws support from the prospect of further US interest rate cuts in 2026. Gold has surged about 65% this year and is set to record its biggest annual gains since 1979.
Bitcoin, Ethereum and XRP prepare for a potential New Year rebound
Bitcoin, Ethereum, and Ripple are holding steady on Wednesday after recording minor gains on the previous day. Technically, Bitcoin could extend gains within a triangle pattern while Ethereum and Ripple face critical overhead resistance.
Bitcoin Price Annual Forecast: BTC holds long-term bullish structure heading into 2026
Bitcoin (BTC) is wrapping up 2025 as one of its most eventful years, defined by unprecedented institutional participation, major regulatory developments, and extreme price volatility.
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