News Trading
Trading around scheduled high-impact economic events — NFP, FOMC, CPI — where volatility and spread widening spike.
Definition
News trading is the practice of taking positions around scheduled high-impact economic releases: Non-Farm Payrolls (NFP), FOMC interest rate decisions, CPI inflation prints, unemployment claims, and central bank speeches. These events cause rapid price swings and dramatic spread widening in the seconds before and after release. Some traders specialize in news events because the volatility creates large directional moves; others avoid news entirely because the spread cost and slippage often overwhelm the edge.
Example
Why It Matters
News trading is a double-edged strategy because the spread and slippage costs rise along with the opportunity. A trader who nets 50 pips on an NFP trade but pays 10 pips in spread and slippage still made money — but on a $100K account with a tight trailing drawdown, the same slippage can trip the drawdown limit before the directional move develops. Understanding whether a firm allows news trading, and what 'around news' means to them, is a critical rule to check before placing the trade.