Why Forex Traders Should Watch the News
As a forex trader, it’s crucial to keep an eye on major economic data releases, speeches from central bankers and government officials, and geopolitical events.
Why does this matter?
Because these events often reflect the health of an economy—and that can signal where a currency might be headed next.
News = Opportunity (and Volatility)
Trading the news isn’t for everyone. It can be tricky, unpredictable, and fast-paced.
But with that unpredictability comes volatility, and volatility means opportunity—if you know how to handle it.
So, why do traders even bother with news trading?
Well… let’s be honest—to make more money!
More seriously though, as you learned earlier, news has the power to move markets.
And when big news hits—especially when it's expected by the whole market—price movements can be huge.
If you know that the market is likely to react, then that’s a potential trade worth considering.
Your job as a news trader? Catch the move—and be on the right side of it.
The Risks of News Trading
Of course, just like any strategy, trading the news comes with risks.
Let’s go over a few you should watch out for:
1. Widened Spreads
During major news events, the market becomes extremely volatile.
To protect themselves, many forex brokers widen the spreads, which increases your trading costs and can eat into your profits.
2. Platform Freezes or Lockouts
Sometimes, you might place a trade, and your platform lags or freezes due to heavy traffic.
You may think your trade didn’t execute, only to find out later that it did—and now the price has moved.
Trying to enter again could mean doubling your exposure by mistake!
3. Slippage
Slippage happens when you place an order at a certain price, but due to fast movement, it gets filled at a much different price—often worse than you expected.
That’s a common headache when volatility spikes right after a news release.
4. Fakeouts and Whipsaws
Markets don’t always move in one smooth direction after news drops.
Often, they’ll spike one way, then whip back the other way, catching traders off guard.
Trying to guess the direction can be frustrating—and costly—if you’re not careful.
Bottom Line: Be Prepared
News trading can be profitable, but it’s not as easy as beating your little cousin at Fortnite.
It requires skill, fast thinking, and—yes—lots of practice.
Most importantly, you need to have a solid plan every time you trade a news event.
In the next lessons, we’ll show you how to approach news trading more safely and effectively.