The Safer Way to Trade News Releases

When major economic news is released, the market usually reacts with a very fast and sharp price move. This is known as the initial spike. The move happens because automated systems and fast traders react instantly to the headline numbers. As a result, the price can jump quickly in one direction within seconds.

However, this first reaction is often unstable. Spreads widen, volatility increases, and prices can reverse quickly as traders begin to analyse the full details of the report. Because of this, the first move is not always reliable and many traders avoid entering trades during this phase.

A more careful approach is to wait for the initial reaction to settle. After the spike, the market starts to digest the information and volatility begins to calm down. At this point, price action often reveals a clearer direction as traders respond to the data in a more measured way.

This strategy focuses on patience. Instead of chasing the first move, traders wait for confirmation of the real direction and then look for an entry, often after a small pullback. By waiting for the market to stabilise, traders can reduce risk and avoid getting caught in false moves that frequently happen right after news releases.