8 Forex News Trading Mistakes That Cost Traders Money (And How to Avoid Them)

News trading looks simple from the outside. Data releases, market moves, profits. But the reality is messier—and most traders learn this the expensive way.

The volatility that creates opportunity also creates risk. Spreads spike, orders slip, and what looked like a clear setup becomes a whipsaw that stops you out twice.

These eight mistakes cost traders the most money during news events. Recognizing them is the first step to avoiding them.

Mistake #1: Trading Every News Release

The calendar shows 40 events this week. Some traders try to trade all of them.

This is exhausting, expensive, and ineffective. Most news releases don’t produce tradeable moves. Medium and low-impact events often result in nothing more than noise and spread costs.

The Problem

Overtrading leads to:

• Accumulated spread costs that erode profits
• Mental fatigue that impairs decision-making
• Treating all events equally when they’re not
• Forced trades on setups that don’t justify the risk

The Fix

Be selective. Focus on high-impact events that consistently move your pairs: NFP, rate decisions, CPI, GDP. Skip everything else unless you have a specific edge.

Quality over quantity. One well-executed NFP trade per month beats twenty marginal news trades.

Mistake #2: Ignoring the Spread

During normal market conditions, EUR/USD might have a 1-pip spread. During NFP, that spread can blow out to 5-10 pips or more.

Many traders focus on the headline move—”EUR/USD moved 80 pips!”—without accounting for the spread. A 30-pip target with an 8-pip spread is actually only 22 pips of profit.

The Problem

• Entering at a worse price than expected
• Stop-losses getting hit by spread, not price
• Winning trades turning into losers after spread cost
• Break-even moves becoming losses

The Fix

• Check your broker’s typical spread during news before trading
• Factor spread into your risk/reward calculations
• Wait 5-15 minutes after release for spreads to normalize
• Use the “wait-and-see” approach instead of trading the initial spike

For more on this, see our guide on understanding forex slippage.

Mistake #3: Overleveraging

News volatility is exciting. The potential for big moves tempts traders to size up positions, thinking they’ll capture more profit.

This is backwards. Higher volatility means you need less leverage, not more.

The Problem

• A 50-pip move against you hits much harder at 10:1 leverage
• Slippage can push losses 15-20 pips beyond your stop
• Whipsaws can trigger stops before the real move
• Account-destroying losses from single events

The Fix

Cut your position size during news. If you normally risk 1-2% per trade, drop to 0.5-1% for high-impact releases.

The volatility works in your favor—you can still capture meaningful profit with smaller positions. And when things go wrong, the damage is contained.

Mistake #4: Chasing the Move

NFP drops. EUR/USD spikes 60 pips in 90 seconds. You weren’t in the trade. Now you’re watching profits happen without you.

So you enter. And immediately the market reverses. You bought the top.

The Problem

By the time you recognize a move and decide to enter, the best part is often over. Chasing leads to:

• Entering at extremes just before reversals
• Buying into exhausted momentum
• Poor risk/reward (small remaining upside, full downside risk)
• Emotional decision-making driven by FOMO

The Fix

If you missed the initial move, let it go. Either:

• Wait for a pullback and enter on the retest
• Skip this event and wait for the next opportunity
• Accept that missing trades is part of trading

There will always be another NFP, another rate decision, another chance. Chasing this one isn’t worth the risk.

Mistake #5: No Pre-Trade Plan

The number drops. You have seconds to react. If you haven’t already decided your approach, you’re making it up in real-time while prices move 10 pips per second.

The Problem

Reactive trading during news leads to:

• Impulsive entries without clear logic
• No predefined stop-loss or target
• Inconsistent position sizing
• Emotional decisions that contradict your system

The Fix

Before every high-impact release, have written answers to:

• Am I trading this event or sitting out?
• Which strategy am I using? (Straddle, wait-and-see, fade)
• What’s my entry trigger?
• Where’s my stop-loss?
• What’s my profit target?
• What position size?

Write it down. When the news drops, you execute the plan—you don’t create one.

Mistake #6: Ignoring What’s “Priced In”

The Fed is expected to hold rates. They hold rates. EUR/USD doesn’t move.

Trader: “But they held rates! Why didn’t it move?”

Because the market already knew. The expected outcome is already reflected in current prices.

The Problem

Markets move on surprises—the difference between what happened and what was expected. If you don’t know what’s priced in, you can’t assess whether the actual result is bullish or bearish.

The Fix

Before every news event:

• Know the consensus forecast
• Understand the range of expectations (not just the median)
• Check market positioning (are traders already positioned for one outcome?)
• Trade the deviation, not the absolute number

A “good” NFP number means nothing if the market expected better.

Mistake #7: Trading Against the Trend

EUR/USD has been trending down for weeks. NFP misses expectations—bearish for USD. You buy EUR/USD expecting a reversal.

Instead, the move is muted. The downtrend resumes. Your counter-trend trade gets steamrolled.

The Problem

News events typically accelerate existing trends rather than reverse them. Trading against the trend during news:

• Requires even larger surprises to work
• Fights momentum from larger players
• Often results in weak, unsustained counter-moves

The Fix

Use news to confirm trends, not fight them. If the trend is down and news supports that direction, trade with it. If news contradicts the trend, be skeptical—either skip the trade or wait for clear confirmation of a reversal.

The best news trades often occur when news aligns with the existing trend, creating momentum continuation.

Mistake #8: Poor Execution Setup

You have the right analysis, the right plan, the right entry level. But your platform freezes. Your order fills 12 pips from your intended price. Your stop-loss gets skipped entirely.

The Problem

During high-volatility news events:

• Broker platforms can lag or freeze
• Orders experience significant slippage
• Connection issues cause missed entries or exits
• Slow execution means trading at worse prices

The Fix

• Use a broker known for good execution during news
• Consider a forex VPS for lower latency and reliable connectivity
• Have backup access to your account (mobile app, different device)
• Avoid market orders at the exact moment of release
• Use limit orders when possible to control fill prices

Latency matters during fast markets. A few hundred milliseconds can mean multiple pips difference in your fill.

The Psychology of News Trading

Beyond tactical mistakes, news trading challenges your psychology in specific ways:

FOMO (Fear of Missing Out)

Watching a move happen without you triggers the urge to jump in. This leads to chasing, overleveraging, and abandoning your plan.

Solution: Accept that you’ll miss some moves. Missing a trade costs nothing. Bad trades cost real money.

Overconfidence After Wins

You nailed the last NFP. Now you feel invincible. You size up, take more risk, get sloppy.

Solution: Treat every trade independently. Past success doesn’t guarantee future results. Stick to your risk rules regardless of recent performance.

Revenge Trading After Losses

The trade went wrong. You want your money back. You immediately enter another position, bigger, trying to recover.

Solution: Step away. One loss during news doesn’t require immediate action. The next opportunity will come. Revenge trades rarely work.

Analysis Paralysis

You have so much data, so many scenarios, that you can’t decide what to do. The moment passes while you’re still analyzing.

Solution: Simplify. Have one strategy per event type. Make your decision before the news, not during.

Building Better Habits: A Pre-News Checklist

Use this checklist before every high-impact news trade:

• ☐ Event confirmed on economic calendar (time, currency, impact)
• ☐ Forecast vs. previous noted
• ☐ Strategy selected (straddle, wait-and-see, fade, or sit out)
• ☐ Currency pair chosen
• ☐ Entry trigger defined
• ☐ Stop-loss level set
• ☐ Profit target set
• ☐ Position size calculated (reduced for news volatility)
• ☐ Platform ready, connection stable
• ☐ Emotionally prepared (calm, not desperate)

If you can’t check every box, consider sitting out.

Frequently Asked Questions

Why do most traders lose money trading news?

Most traders lose on news because they underestimate volatility risks, ignore spread widening, overtrade by attempting every release, and make impulsive decisions without pre-planned strategies. The speed of news moves also triggers emotional reactions that override sound judgment.

Should beginners trade forex news events?

Beginners can trade news, but should start cautiously. Practice on demo accounts first, focus on one event type (like NFP), use the wait-and-see approach rather than trading initial spikes, and always use reduced position sizes. Many beginners benefit from observing several news events before trading them.

How do I control emotions when trading news?

Have a complete plan before the news drops—entry, stop, target all decided in advance. Use smaller position sizes so losses don’t trigger panic. Accept that you can’t catch every move. Step away from screens if you feel FOMO pulling you into bad trades.

Is it better to trade before or after news releases?

For most traders, trading after the release is safer. You avoid the risk of being on the wrong side of a surprise, and you can enter once direction is established. Pre-news trading is high-risk and typically only suitable for experienced traders with specific strategies.

How much should I risk on news trades?

Less than normal trades. If you typically risk 1-2% per trade, consider 0.5-1% for news events. The increased volatility means larger potential losses, and slippage can push losses beyond your intended stop-loss level.

Final Thoughts

News trading mistakes are expensive—but they’re also avoidable. Every error on this list has a straightforward fix. The challenge is having the discipline to implement the fixes consistently.

Start by eliminating one mistake at a time. If you’re overtrading, commit to only trading high-impact events. If you’re chasing moves, practice sitting out when you miss the entry. If you’re trading without a plan, don’t take another news trade until you have one written down.

The traders who profit from news events aren’t necessarily smarter or faster. They’re more disciplined, more selective, and more prepared. That’s available to anyone willing to do the work.

For more on news trading fundamentals, see our beginner’s guide to forex news trading, NFP trading guide, and interest rate trading guide.