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How do news events impact forex markets?
News events like central bank announcements, economic data (e.g., GDP, NFP), and geopolitical developments can cause significant volatility in forex markets. Positive news often strengthens a currency, while negative news weakens it. Traders use the Economic Calendar to anticipate and react to these events, adjusting positions accordingly.
However, trading news carries risks—spreads may widen, and slippage can occur. Some traders avoid news events altogether, while others specialize in volatility strategies like breakout trading. Always use stop-losses and avoid over-leveraging during high-impact news. Understanding market sentiment is just as important as the news itself.
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You're spot on. News can cause sharp spikes and fakeouts, especially on high-impact events like NFP or interest rate decisions. I only trade XAUUSD, and news like CPI or FOMC minutes often creates big moves there. Timing, risk control, and knowing when to stay out are key. If you don’t have a plan for news, better to sit it out.
