Mastering high-impact news trading: Two essential tips [Video]
|What is the market thinking?
Before a major news release, understanding market sentiment is crucial. Traders rely on tools like the Fed Watch Tool to gauge expectations. For instance, during the latest FOMC meeting, most traders anticipated no change in interest rates (holding steady at 4.25% - 4.50%), with only a small percentage expecting a 25bps cut.
Apart from trading tools, expert analysis from Wall Street strategists can provide additional insights—though they aren’t always right, they help shape the broader sentiment.
Has the market already priced it in?
One of the biggest traps traders fall into is reacting to news that the market has already accounted for. A perfect example: Leading up to the FOMC rate decision, the USD surged across major currency pairs (EUR/USD, GBP/USD, AUD/USD, NZD/USD). This suggested that traders had already factored in an unchanged rate decision. Once the official news was released, prices briefly dropped but quickly reversed back to their pre-news levels—proving that the market had anticipated the outcome.
Key trading takeaways:
-
Avoid impulsive trades when news drops—volatility can spike, spreads widen, and whipsaws occur.
-
Use breakout or confirmation strategies rather than chasing price movements.
-
Try not to be impulsive—don’t gamble in the global markets. High-impact news events create opportunity, but only if you approach them with a plan. Stick to strategy, manage risk, and avoid emotional trades.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.