News Trading: Gambling with Extra Steps

Look, I’m going to be straight with you. I’ve been doing this for seventeen years, and I’ve watched more traders blow accounts on NFP Friday than I’ve had proper cups of tea. And that’s saying something, because I’m British and I take my tea very seriously.

The premise of news trading is simple: economic data gets released, the market moves, and if you’re positioned correctly, you print money. It’s elegant. It’s logical. It’s also complete bollocks for 99% of the people who attempt it.

The Siren Song of the Economic Calendar

Let me paint you a picture. It’s Tuesday morning. You’re scrolling through the economic calendar—those little coloured boxes that promise riches beyond measure. Red box means high impact. Yellow box means medium. Green box means “you can probably ignore this unless you’re a complete degenerate.”

You see it: NFP at 1:30 PM EST. Non-Farm Payroll. The heavyweight champion of economic releases. Your brain starts firing dopamine like a slot machine in Vegas. “This time,” you think, “this time I’ll get it right.”

Here’s the thing: you won’t.

Not because you’re stupid. But because you’re playing a game that’s been rigged before you even logged in. The banks know when NFP is coming. The hedge funds know. The algorithms know. You know. Everyone knows. So what exactly do you think gives you an edge?

The Illusion of an Edge

Let me tell you what I’ve observed over two decades of trading through economic releases:

First, volatility expands massively. Your pip value explodes. A 20-pip move suddenly feels like you’ve made or lost a fortune. Your position size, which looked reasonable at 10 AM, now looks like you’ve mortgaged your mum’s house.

Second, the initial spike is usually a trap. The market moves one direction violently for about fifteen seconds, then reverses completely. This is called the “flash reversal,” and it’s where most news traders get absolutely destroyed. They jump in after the first move, convinced they’ve spotted the trend, and three seconds later they’re watching their account evaporate like a pint of bitter left in the sun.

Third, spreads widen like a bloke’s waistband after Christmas dinner. That tight spread you were counting on? Gone. Your 1.5 pip EUR/USD spread is now 8 pips. Your slippage is measured in dozens of pips. By the time your order executes, you’re already down before you’ve even started.

Fourth—and this is the real kicker—the data is already priced in by the time it hits your terminal. The banks have been trading it for hours on their direct feeds. By the time you’re reading about it on your retail platform, the smart money has already taken their profits and shifted to the next trade.

The Mathematics of Disaster

Let’s do some maths, yeah?

You’ve got a £10,000 account. You want to trade the NFP. You’re thinking you’ll risk 2% per trade—standard money management stuff. That’s £200 risk.

EUR/USD is trading around 1.0900. You think the dollar will weaken post-NFP (because jobs were strong, which means the Fed might hold rates longer, which means… wait, no, I got that backwards. Damn economics).

Anyway, you open a position. You set your stop loss 20 pips away. Your take profit is 40 pips because you’re a “risk-reward” guy.

The data drops. The market moves 300 pips in 8 seconds.

Your stop loss execution fills at 47 pips away from your entry, not 20, because of slippage. You’ve lost £470 instead of £200. That’s 4.7% of your account.

But wait—you’re not done. You’re frustrated. You take another trade immediately. Same thing happens. Another 4.7%.

Now you’ve lost 9.4% in fifteen minutes. Your £10,000 is now £9,060.

And here’s where it gets interesting: that remaining £9,060 needs to make 10.4% just to break even. Most traders don’t survive long enough to get there.

Why You Keep Doing It (And Why I Sometimes Do Too)

Here’s the uncomfortable truth that none of the YouTube gurus will tell you: news trading feels amazing when it works.

The dopamine hit of capturing a 200-pip move in two minutes is genuinely more powerful than heroin. I’m not exaggerating. It’s primal. It’s why people keep coming back.

That’s also exactly why it’s so dangerous.

Every casino in the world is built on the backs of people who won once and came back a thousand times trying to recreate that feeling. News trading is just the Forex equivalent with a Bloomberg terminal and a fancy economic calendar.

I’ve made obscene amounts of money news trading. I’ve also lost enough in single sessions to buy a decent car. The difference between now and when I was starting out? I don’t do it anymore unless the conditions are absolutely pristine, and I size down to absolutely ridiculous positions.

The Actual Way to Handle News

If you’re going to trade around economic news, here’s what actually works:

One: Don’t predict. React. Get your orders ready, but wait for confirmation. Most traders do it backwards.

Two: Trade smaller than you think you should. Like, genuinely stupid small. A 1% risk position feels weak until your account is still intact and your competitor’s account is smoking rubble.

Three: Understand what the data actually means. I see traders all the time who don’t even know whether strong jobs data is bullish or bearish for the currency. If you don’t know, you have no business trading it.

Four: Use a calculator. Work out your exact position size before the news hits. Don’t wing it. The moment you’re improvising, you’ve already lost.

Five: Maybe just… don’t? Seriously. There are 250 trading days a year. Do you really need to gamble on the 8 or so truly volatile news events? Just trade the easy money on the other 242 days.

The Bottom Line

News trading is gambling with extra steps. It’s got fancy charts, it’s got economics, it’s got a calendar. But underneath it all, you’re essentially betting against a rigged table while pretending you’ve got an edge.

I still do it occasionally because I can afford to lose a trade. Most of you can’t.

So either get serious about it—study the data, learn how markets actually react, size down to microscopic positions, and accept a 60% win rate—or just skip it and trade the trending days.

Your account will thank me later.

Now, if you’ll excuse me, I’ve got a proper cup of tea to make.