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Economic Data Releases - Can You Successfully Trade Them?

Oct 26, 2007
Economic data releases occur almost every day and can have a dramatic effect on the forex markets, and indeed all major markets. They can cause wild swings and increased volatility which is great for traders, but can you successfully profit from them as a forex trader?

Before I address that question, let me start off by talking about data releases in more detail. As a trader the first thing you should do every day is consult an economic calendar to see what releases are scheduled for the forthcoming day. This will allow you to determine when you should be out of a trade if you don't want to trade through them, or when to turn your computer on and be ready to trade if you do wish to trade them.

The best economic calendar in my opinion is at Forex Factory as this tells you not only what releases are scheduled for the day, but also the predicted and actual figures for each release, plus the importance of each one and the effect that they may have on specific currency pairs.

Different data releases affect currencies in different ways. For example, interest rate decisions and non-farm payrolls have a major impact on dollar currencies whereas other less significant data releases will hardly have an effect at all and will remain little changed.

So it's best to arm yourself with all this information and be fully prepared for any scheduled releases, but can you profit from them?

Well in my opinion I don't think you can consistently make profits trading the news as soon as it's released simply because it's extremely difficult to predict how the market will react to any given news.

For example, sometimes you will get seemingly bullish figures and expect the currency to go up, but it will do the complete opposite. Other times it will go up initially and then reverse as analysts and traders digest the news.

It really is an extremely difficult way to trade the markets, particularly for the individual trader working alone. Trying to second guess the market is a very dangerous game.

In my opinion there are far easier ways to trade the forex markets using solid technical analysis methods. You don't need to trade during those times when market-moving figures are announced because all they will do is distort any technical analysis and make it very difficult to enter a trade with confidence.

Furthermore I always believe it's best to exit trades in advance of economic data releases simply because prices can move very fast and your stop losses may not get filled at the price you requested.

I'm sure there are people who can make profits from news releases, but in my experience it's extremely difficult and akin to gambling in some instances.
About the Author
James Woolley has been trading currencies for around five years and also runs a forex trading blog dedicated to offering free forex tips and strategies.
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