Why news trading is a bad idea
You don’t trade the actual news. You trade peoples’ expectations and how the news are perceived.
Price reacts to news in so many different ways and you can often see that price drops significantly after a good news release or it shoots up when the news are bad.
Whenever you catch yourself chasing a move without a plan, then you have made a huge mistake – it’s the sign of an amateur trader.
Furthermore, price volatility tends to rise to extreme levels when news is broadcast. This will generally result in wide quotation spreads and increases the likelihood of stops getting executed under the most unfavorable conditions.