High-impact news events, like central bank announcements or non-farm payroll (NFP) reports, can cause significant volatility in the forex markets. I’m curious about the strategies that other traders are using to navigate these periods. Personally, I’ve found that using a straddle strategy—placing both a buy stop and a sell stop order just above and below the current price—can be effective. This way, I can potentially capture a breakout in either direction. However, I’ve also encountered challenges, like slippage and unexpected market reversals. I’m interested in hearing how others approach trading during these volatile times. Do you prefer staying out of the market entirely, or do you have a specific strategy that works well for you? Also, what tools or indicators do you find most useful in these scenarios? Let’s discuss the pros and cons of different strategies and share some tips on how to manage the risks associated with trading during high-impact news events.
The best strategy is not to trade in such an unpredictable part of the market. When the market calms down, you will have many more opportunities to make more risk-free entries with a greater chance of making money.
The pattern I've seen is the first spike is usually the bait, so fade the spike when it runs out of gas. The next move is about twice as big, going the other direction.
From my testing and trading the news, I can say that you cannot get consistent results over a longer period. In the short term, say 3 or up to 6 months you can get good results. But it is very difficult to go from backtesting to out-of-sample real trading, because there are so many shifts when trading the news. Also your news straddling can be tricky, it really depends on your broker and market maker behind. But I would say as soon as they figure out you make consistent money with trading smaller size on news straddles you will get problems. So this might be only a very short term solution and maybe you are forced to do broker hopping with different market makers behind to overcome this. But then again it is very limited. I have seen some traders who do USDJPY straddles on news with 10 pips above and below the red news and then close the position within seconds after the news. But I think it is limited first to at least max. 10 lots otherwise you get too much slippage and then again if the broker sees you are doing this every time in your favor like a money printing machine you might face soon problems, like putting you on the A-book with much worse fills or execution delays etc. That is why stay away trading the news (short term).