How to Trade Around News Events in Futures

A funded trader messaged me before a coaching call: "There's a big economic report coming out tomorrow morning. Should I even trade?"

It's a question I get weekly. And the answer is: it depends on who you are and where you are in your journey.

The Pre-Market Calendar Check

Before any trading session, one of the first things I tell funded traders to do is check the economic calendar. This isn't optional — it's part of your routine.

"Review the economic calendar. What news events could impact today's session?" This should be done during your pre-market prep, at least 30 minutes before the open.

What you're looking for:

• Red flag events — FOMC, CPI, NFP, GDP. These are market-moving and create extreme volatility.
• Orange/medium events — Existing home sales, consumer confidence, etc. Usually a temporary blip.
• Low-impact events — Probably won't matter, but you should know they exist.

For New Traders: Just Sit Out

If you're in the first few months of live trading, my advice is simple: don't trade during high-impact news events.

The fakeouts during news events are vicious. Price spikes one direction, stops everyone out, then reverses violently. I've watched funded traders get stopped out of perfectly good positions because they were in a trade when CPI dropped.

I told one of our funded traders who got caught in a news-driven fakeout: "When you get faked out, and that ends up being the biggest move of the day — there's a part of us that's like, 'I was kind of owed that one.' And that feeling drives revenge trading."

The emotional damage from a news-driven fakeout is disproportionate to the actual financial damage. You lose money AND you lose composure. That combination kills accounts.

For Experienced Traders: Reduce and Respect

If you've been trading for a while and have a proven process, you don't necessarily need to sit out entirely. But you need to adapt:

Before the Event

• Flatten all positions — Get out of anything you're holding at least 5 minutes before the event
• Reduce your risk — If you're going to trade after the event, use half your normal size
• Widen your mental stops — The first candle after a major event will be larger than normal. Your usual stop distance might get you stopped out on noise.

After the Event

• Wait for the dust to settle — At minimum, wait for the initial reaction candle to close. Better yet, wait for a second candle to confirm direction.
• Look for the trap — The initial move is often a fakeout. The real move comes after the first wave of stop-outs.
• Trade the structure, not the news — The news tells you there's volatility. Your price action strategy tells you what to do with it.

The Fakeout Pattern

News events create a very specific pattern that I coach funded traders to recognize:

1. Pre-news compression — Price gets quiet as traders flatten ahead of the event
2. Initial spike — A violent move in one direction (or both) in the first seconds
3. The trap — Early entrants get stopped out as price reverses
4. The real move — Once the stops are cleared, price establishes its true direction
5. Continuation or fade — Over the next 30-60 minutes, price either continues the move or fades back to pre-news levels

The traders who get hurt are the ones who enter during phase 2 or 3. The traders who profit are the ones who wait for phase 4 or 5.

Trading the Aftermath

Some of the best trading setups happen not during the news event, but 30-60 minutes after. By then:

• The initial volatility has settled
• A clear trend or range has established
• Stop-hunting is mostly complete
• Your normal price action strategies start working again

I've seen funded traders completely miss the morning because they were afraid of news — only to miss excellent setups in the post-news environment. The news itself is dangerous. The market structure it creates can be opportunity.

The Funded Account Exception

If you're on a funded account with tight drawdown limits, I'm even more conservative: just don't trade around major news.

On a funded account, one bad fill during a news spike can take 50% of your drawdown allowance in seconds. It's not worth it. There will be 250+ trading days this year. Sitting out 15-20 of them for high-impact news costs you almost nothing.

Protecting your account is always more important than catching a move.

This article is based on real coaching sessions with DTR Trading funded traders. The scenarios and advice are drawn directly from one-on-one calls where traders brought their real challenges to work through together.