With the FOMC meeting & decision tomorrow and a very busy earnings calendar this week, many traders are preparing for the possibility of some big market moves.
That volatility can create opportunity. But it can also bring fast reversals, wider spreads, slippage, and losses that happen much faster than expected.
So here’s a question that I always think about on weeks like this one:
When does trading the news become a calculated risk, and when does it become a gamble?
For me, the difference comes down to the plan. Am I trading a setup I’ve tested and understand, with a risk structure I’ve chosen in advance? Or am I jumping in because the candles are moving and I’m afraid of missing out?
Even with a tested strategy, a stop order isn’t a guarantee of an exact exit price in a fast market. And sitting out until the volatility settles, or skipping the event altogether, is a valid plan, too.
I’d love to hear how others approach it:
Do you trade through major news releases, wait for the initial reaction, or stay out entirely?
If you do trade them, do you adjust your position size or risk?
What has experience taught you about trading FOMC or earnings-driven moves?
No right or wrong answers here - I’m interested in the different approaches and what traders have learned along the way.
I know I learned by getting burned and am very intentional for sure these weeks! You?
When there is important news the risk is much bigger than usual. Therefor I don’t trade when the news comes out. I have plenty of opportunities to make money the rest of the day, so I don’t need to take the extra risk.
Important news is what I see on the Economical calendar with three stars, all the rest is not important to me, so I can trade these announcements without any increased risk.
If your trading system is based on news, then I would say news matters. However, if your system doesn’t rely on news to make trading decisions, then why would that question even be relevant? I don’t understand how you can mix two completely different approaches. A news-based trading system and a system driven by market data are not the same thing. Each operates on different information and strategies. However, if you state “But it can also bring fast reversals, wider spreads, slippage, and losses that happen much faster than expected.” than all i can say is that your system needs adjustments, big adjustments! also if your exit is not triggering you probably need have a 1 on 1 with your broker and explain the situation.
I’ve experience that signals will always be signals, news comes in hot, greater signals, so if a news event happens and the market moves and your system did not, sometimes some free trading education courses are needed.
I don’t think the right approach to learn trading is by getting burnt, if u need more education towards trading, for me I would rather study and learn than to get burnt.
just my opinion.
Love this. Definitely a R;R question! And absolutely on always being aware of when news hits so that you can be cautious about trading in play around that time. Sounds like you’ve considered the situation and are solid in your choice around it!
Thanks for sharing your perspective. I agree that education, testing, and understanding your system are essential.
My point was about execution conditions around scheduled news. A trader can use price, volume, and technical setups for entries while still considering how a major release might affect volatility and execution. Those considerations can coexist.
I also wasn’t describing an exit failing to trigger. A stop or take profit triggering and the price at which it fills are separate things, particularly with stop-market orders during a fast move.
Whether someone adjusts size depends on their tested rules. If their approach already accounts for those conditions, they may make no adjustment. Another trader may reduce size or wait for the initial reaction.
That was the discussion I hoped to open: how traders prepare for these conditions within their own approach. Education and preparation are exactly what I’m encouraging. And I have certainly found an edge with trading after news events, such as 40 minutes into the FOMC events, that works really well. But, it’s not for everyone!
