Trading Around News Events: A Survival Guide

It's 8:29 AM Eastern. Your strategy is running. You have a position on. And in one minute, the Non-Farm Payrolls report drops.

What happens next could be anything. A 50-point move in seconds. Your stop blown through without even touching your price. Or... nothing. A non-event where the market shrugs and moves on.

News events are the wild cards of trading. If you're automating, you need a plan for them.

The Big Events That Move Markets

Not all news is created equal. Some releases barely register. Others can send markets 100 points in either direction. Here are the heavy hitters:

Federal Reserve (FOMC) Announcements

The biggest market movers of all. Interest rate decisions, policy statements, and press conferences. Markets hang on every word.

When: Eight scheduled meetings per year, plus emergency meetings Time: Typically 2:00 PM ET (decision), 2:30 PM ET (press conference) Impact: Can move ES 50-100+ points in minutes

Employment Reports (NFP)

Non-Farm Payrolls is the monthly jobs report. The headline number, unemployment rate, and wage growth all matter.

When: First Friday of each month Time: 8:30 AM ET Impact: Typically 20-50 points on ES, sometimes more

Inflation Data (CPI/PPI)

Consumer Price Index and Producer Price Index. In high-inflation environments, these become market-moving events.

When: Monthly Time: 8:30 AM ET Impact: 20-60 points depending on surprise factor

GDP Reports

Gross Domestic Product releases. Advance, preliminary, and final readings.

When: Quarterly Time: 8:30 AM ET Impact: Usually 10-30 points, larger if unexpected

Other Notable Events

• JOLTS (Job Openings): 10:00 AM ET monthly
• ISM Manufacturing/Services: 10:00 AM ET monthly
• Retail Sales: 8:30 AM ET monthly
• Housing Data: Various times
• Earnings Season: Individual stocks, but affects indices

Why News Volatility Is Different

Normal market volatility happens in a flowing, tradeable way. The market moves up, consolidates, moves down, finds support. Technical patterns form. Your strategy can read the action.

News volatility is a shock. A binary event hits, and the market gapping, jumping, whipsawing in ways that have nothing to do with technical patterns.

Liquidity evaporates: Before major news, many participants pull their orders. The order book thins out. What was a 0.25-point spread becomes 2 points.

Stops don't work as expected: Your stop at 4500 might get filled at 4490 because the market gapped right through it. There was no one to take the other side at your price.

Reversals are instant: The market spikes 30 points on the headline, then reverses 40 points when traders digest the details. Both moves happen in seconds.

Your signals mean nothing: That bullish pattern your indicator showed? It's irrelevant now. The market is trading on the number, not on chart patterns.

This isn't the kind of volatility most strategies are designed to handle.

Three Approaches to News Events

Approach 1: Avoid Them Entirely

This is the simplest and often smartest approach. Just don't trade around major news.

How to implement:

• Flatten positions 5-15 minutes before major releases
• Disable new entries during news windows
• Resume normal trading 15-30 minutes after the event

Pros:

• No surprise losses from news gaps
• Your strategy trades in conditions it's designed for
• Simpler to manage

Cons:

• You'll miss some moves
• Sometimes the news resolves uncertainty and creates tradeable trends

For most automated strategies, this is the right choice. Your edge probably doesn't extend to news trading, so why expose yourself to that risk?

Approach 2: Reduce Size

Maybe you don't want to miss the action entirely, but you want to limit exposure.

How to implement:

• Cut position size by 50-75% around news
• Widen stops (so they don't get triggered by noise)
• Accept that these trades might behave differently

Pros:

• Still participate in post-news moves
• Limited downside if things go wrong
• Can capture news-driven trends

Cons:

• Still exposed to gap risk
• Wider stops mean bigger potential losses per trade
• More complex to implement

This is a middle ground that some traders prefer.

Approach 3: Trade the News

Some traders specifically target news events. They want that volatility.

How to implement:

• Wait for the initial reaction
• Look for continuation or reversal patterns
• Trade the second move, not the first spike

Pros:

• News often creates strong trends
• Big moves mean big profit potential
• Less competition than normal trading (many sit out)

Cons:

• Requires specialized skills
• Losses can be larger
• Very different from normal strategy trading
• Not suitable for most automation

If you're going to trade news, develop a specific approach for it. Don't just let your normal strategy run into these events.

Setting Up Automation Pauses

If you decide to avoid news (recommended for most traders), here's how to think about it:

Use an Economic Calendar

Several sources provide economic calendars:

• ForexFactory (free, comprehensive)
• Investing.com Economic Calendar
• TradingEconomics
• Bloomberg (if you have access)

Check the calendar at least weekly. Know what's coming.

Define Your No-Trade Windows

For major events (FOMC, NFP, CPI):

• Stop new entries 10-15 minutes before
• Flatten existing positions if desired
• Resume 15-30 minutes after, once volatility normalizes

For minor events:

• Maybe just avoid new entries
• Let existing positions run with normal stops

Manual vs Automated Pauses

Manual approach: Check the calendar, manually disable your automation before news, re-enable after. Simple but requires you to remember and be available.

Automated approach: Some traders use scripts or services that automatically pause trading during scheduled events. More reliable but more complex to set up.

Either works. The key is having a system you'll actually follow.

Building News Awareness Into Your Rules

Beyond just pausing, you can incorporate news awareness into your trading rules:

Wider Stops on News Days

If today has a major release, consider wider stops for trades taken earlier in the day. That 10-point stop might need to be 15 points to survive the news reaction.

No Trades Before News

Rule: Don't enter positions within 2 hours of a major release. This prevents getting caught holding when the event hits.

Post-News Confirmation

After news, wait for a few bars to confirm direction before trading. Let the initial chaos settle.

Size Reduction on High-Impact Days

When multiple high-impact events are scheduled (like FOMC day), reduce overall exposure. The whole day can be choppy.

A Realistic Approach

Here's what a sensible news policy looks like for most automated traders:

Daily check: Look at tomorrow's calendar each evening. Flag any major releases.

Pre-market check: Confirm no unexpected events added. Some get rescheduled.

FOMC days: Consider trading only before the announcement or not at all. These days are unpredictable.

NFP Fridays: Either avoid the morning session or flatten positions by 8:25 AM ET.

CPI releases: Similar to NFP. Flatten before or sit out the morning.

Normal days: Trade your strategy as usual.

This isn't complicated, but it requires discipline. Many traders know they should avoid news but talk themselves into staying in because "maybe this time will be different."

It won't. Have your rules and follow them.

What Happens If You Get Caught

Despite your best intentions, you might end up holding a position when news hits. It happens.

Don't panic: The initial spike is often not the final move. If your stop wasn't hit, wait to assess.

Don't add: Resist the urge to double down or revenge trade.

Accept the outcome: Whether you win or lose on that trade, it's done. Learn from it and move on.

Review your process: Did you forget to check the calendar? Were you aware of the event but decided to risk it? Identify what went wrong so it doesn't repeat.

The Bottom Line

News events are a fact of life in trading. You can't avoid them forever, but you can manage your exposure intelligently.

For most automated traders, the right move is simple: step aside when the big numbers drop. Your strategy is designed for normal market conditions. News is not normal conditions.

Check your calendar, set your rules, and follow them consistently. The traders who survive long-term are the ones who respect the events they don't understand and avoid putting their accounts at the mercy of a single number.

Let the gamblers trade the news. You're running a system, and that means trading on your terms.