News trading is a trading approach where traders take positions specifically around scheduled economic news releases, aiming to profit from the price movements the announcements produce. The strategy focuses on events with high market impact, since these are most likely to create the sharp, directional moves that make short-holding-period trades viable.
News traders operate in one of two ways. Some enter positions before a release based on expectations for the outcome, aiming to capture the immediate move when the announcement is made. Others wait for the release and enter after the initial reaction, trading the continuation or reversal that follows. Common events include central bank interest rate decisions, employment reports such as US non-farm payrolls, inflation data such as CPI and PPI, and quarterly GDP releases. Traders typically use an economic calendar to plan around these events.
