Trading the News: Risks and How Not to Blow Your Account
News drives the sharpest moves in the market, and the most unexpected losses. We cover what happens to price at the moment data comes out, why your stop can fill worse than where you set it, and how to trade more calmly.
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What happens when news hits
In the seconds before and after major data is released, many traders pull their orders from the order book. Liquidity drops, the spread widens, and price can jump straight over several levels. A stop-market order at that moment fills at the first available price — with slippage. With stocks and futures there can be a gap between sessions: price opens far from the previous close.
Which news matters
| Event | How often | What it moves |
|---|---|---|
| Fed interest rate decision | 8 scheduled meetings a year | The dollar, stocks, crypto — the whole market |
| US inflation (CPI) | Once a month | Rate expectations |
| US jobs report | Usually the first Friday of the month | Expectations for the economy and rates |
| Company earnings | Once a quarter | A specific stock, sometimes a sector |
| Crypto events | No schedule | Hacks, delistings, regulator decisions, token unlocks |
Why the rate matters so much: see Fed rate and inflation in the glossary. Exact release dates are in the economic calendar; check it every morning before you trade.
The main risks
- Stop slippage. You set a stop at −2%, it filled at −3%.
- Whipsaw. Within a minute price hits stops above and below, then goes exactly where you expected.
- "Buy the rumour, sell the news". Good news everyone was waiting for is already priced in — price often drops after it.
- Fakes. In crypto, "news" from a Telegram channel can turn out to be a rumour or a deliberate plant. Check the original source.
- Leverage. A sharp spike can push a position to liquidation before the stop triggers.
Example: what slippage costs
Account size: 1,000 USDT. Normal risk: 1%, or 10 USDT. Stop 2% below entry, position 10 ÷ 2% = 500 USDT. When the news hits, the stop fills 3% below entry: the loss is now 15 USDT, one and a half times the plan.
The fix: halve your risk around news, to 0.5%, or 5 USDT. With the same stop the position is 250 USDT. Even with slippage of up to 3%, the loss would be about 7.5 USDT — less than your normal risk. You can work out your own case in the position size calculator.
Three approaches for beginners
- Do not trade. 15–30 minutes before a major release, do not open new trades, and close or reduce short-term positions. The simplest and often the best option.
- Wait for things to settle. 15–30 minutes after the data comes out, the spread narrows and new levels appear on the chart. From there it is a normal trade following your plan, with a stop.
- Reduced risk. If you do enter close to the news — 0.5% risk instead of 1%, and room for slippage.
Beginners should not place pending orders "for a breakout both ways" right before the news: in a whipsaw both can get filled. The general rules: risk management in trading.
Common mistakes
- Entering in the first minute "in the direction of the candle".
- Trading without a calendar — the news catches you with an open position and a tight stop.
- Trusting a headline without checking the source.
- Increasing the position "because there is definitely going to be a big move now".
What you are risking
Around news, a loss can turn out bigger than planned: the stop fills with slippage, and in a gap — far from the price you set. With leverage, a sharp spike can force-close your position. Nobody is promised a profit on news, even if you read the meaning of the news correctly: the market may have priced it in beforehand. A stop-loss is mandatory, and it is better to reduce risk around major events.
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- When news hits, the spread widens and stops fill with slippage.
- Check the economic calendar before every trading session.
- It is easier for beginners not to trade during the first 15–30 minutes after major data.
- Around news — 0.5% risk and a stop-loss on every trade.
FAQ
Which news moves the market the most?
On the macro side — Fed rate decisions, US inflation data (CPI) and the jobs report. In crypto — exchange hacks, delistings, regulator decisions and large token unlocks. Macro release dates are in the economic calendar.
Should I close my position before the news?
If your stop is close and the news is important, it makes sense to reduce or close the position. If it is a medium-term position with a distant stop, people often keep it, but they check that the position size allows for possible slippage.
Why does price whip both ways right after the news?
In the first few minutes liquidity drops, the spread widens and traders quickly reprice their expectations. Price can hit stops above and below before it picks a direction. That is why beginners are better off waiting 15–30 minutes.
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Not investment advice. Trading involves risk — always use a stop-loss.