In the world of trading 📈, making the right decisions at the right time is the key to success ✅. However, there is a golden rule that many traders often overlook: do not trade during important news! This may seem strange to some 🤔, as they expect news to provide opportunities for quick profits 💰. But the truth is that trading during news can be a major risk to your capital 🚨.
Market Volatility: A Double-Edged Sword
When big economic or political news comes out 🌍, such as jobs reports or interest rate decisions 💼, markets experience unexpected movements. These rapid fluctuations cause prices to jump sharply up or down in a matter of seconds ⏱️. This may sound exciting, but it carries high risks because:
1. Spreads: During news, brokers increase their spreads significantly 📊, which means you pay a higher cost to open and close trades.
2. Slippage: You may find yourself entering or exiting a trade at a completely different price than you planned 🎯.
3. Random fluctuations: Markets may move against your expectations, even if the news is positive or negative according to fundamental analysis 🔄.
Real examples of the risks of trading during the news
In 2015, the Swiss National Bank 🇨🇭's decision to de-peg the Swiss franc caused huge losses for traders and companies 💥.
During the global pandemic 🌐, markets have seen crazy fluctuations with every new news about vaccines or lockdowns 🩺.
Why is it a wise choice to stay away from trading during news time?
Capital Protection 💼: Avoiding uncalculated risks is better than entering into adventures that may lead to huge losses 🔥.
More accurate analysis 🧠: After the news impact is over, the market becomes more stable, allowing you to make decisions based on clear data 📈.
Reduce stress 😌: Rapid fluctuations cause a lot of psychological pressure, which can affect your ability to make rational decisions 🤯.
How to avoid trading during news?
1. Follow the economic calendar 📅: Identify the times of important news releases such as interest rate decisions or unemployment data 📊.
2. Avoid opening new trades right before the news 🚫: Let the market stabilize first ⚖️.
3. Use hedging tools 🛡️: If you have open trades, you may need to reduce their size or use stop loss orders.
Conclusion
Trading during news may seem tempting, but it’s like walking a bumpy road ⚠️. Don’t let your desire for quick profits 💸 make you overlook the risks involved. Wise trading decisions are based on calm and planning 🧘♂️, not on rash fluctuations 🌀. Always choose safety and invest your time in analysis after the storm has subsided 🌤️.