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High-Impact News that can cause Negative Slippage (Sep 07 - Sep 13)
Trading around news events can also lead to heightened risks due to sudden and unpredictable market movements. Some prop trading companies may restrict clients from entering new positions or exiting trades during high-impact news events.
High-impact news refers to economic events like central bank decisions, employment reports, and inflation data that can cause significant market volatility.
It creates volatility, presenting both risks and opportunities for traders who rely on short-term price movements and leverage.
Major events include central bank announcements, non-farm payrolls, inflation reports, GDP releases, earnings reports, and geopolitical events.
Liquidity often drops before and after major news releases, leading to wider spreads, increased slippage, and more unpredictable price movements.
Common strategies include news trading, fading overreactions, breakout trading, and hedging to manage risk.
It depends on your risk tolerance. Some traders capitalize on volatility, while others avoid the unpredictability. Many prop firms impose trading restrictions during major events.
Firms may restrict trading, enforce stricter risk management, or provide special opportunities for traders who can manage volatility effectively.
Economic calendars are available on platforms like ForexFactory, Investing.com, and TradingView.
Check the economic calendar, understand market expectations, use stop losses, backtest strategies, and be prepared for volatility and slippage.
Risks include slippage, widened spreads, emotional trading, and unpredictable market reactions that can lead to unexpected losses.