We've all seen the HUGE spikes in price when an important news event is going on. I'm sure 99% on you reading this were wishing the last time you saw that huge spike you were in that trade. Hindsight can fill traders with a false sense of hope or a false sense or how the markets really work.
The main reason we do not trade the news is due to the fact, 99% of the time price action goes out the window. Once price action is no longer relevant our system is not going to work. Not to mention the algo's and black boxes are going to be looking and listening for keywords. Once they hear/see these keywords they are going to react 1000 times fast then the regular trader will be able to.
This extremely fast movement then in-turns puts retail traders in a tough spot. Do you FOMO a trade and get in simply because you saw a big move or do you sit on the sidelines? If you said sit on the sidelines you are correct.
The best way to trade the news is to simply turn off your charts and go on about your day. That is especially true when it comes to FOMC days.
As a day trader we must be able to identify when the markets are best for us. 99% of the time trading important news day is not the best environment for a day trader to trade in. Now you could get lucky at times but why risk it?
As I mentioned above you've seen the huge spikes when news is released, you can also see huge spikes once you get into a trade. Resulting in a HUGE loss all because you FOMO'd a trade.
In hindsight news day spikes look very obvious, but in the heat of the moment and the moments leading up to the news it can be very hectic and even confusing at times.
My main rules for news are as follows: If Jerome Powell is speaking or if there are any FOMC conference/statements being released that day I do not trade. The risk in my eyes is not worth the potential reward, not to mention taking a day or two offer can be great for your trading.
It's simple big news days should be a day off for you! Don't put your account at risk because your too stubborn to take the day off.