News Trading Strategy for CFD Explained

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Experienced traders know the importance of keeping track of new developments in capital markets. In fact, many trading strategies are founded on the act of watching news headlines in a bid to derive market bias and enter new opportune positions. News releases have great influence on the values of financial assets and play a big role in causing price fluctuations. By doing this, the flow of news opens up new CFD trading opportunities.

Simply explained, CFDs are a form of trading where the profit of the investor depends on the difference between a trades opening price and its closing price. The meaning of CFD is additionally explained in this article.

This is why it is advised that CFD traders monitor all future data releases and economic announcements, as these things do a great job of swaying the market sentiment towards an asset. To read more about CFD trading click here

Trading on Economic and Financial News Data

The News Trading Strategy hinges on the release of data from numerous countries, which determines the volatility and direction of short-term asset prices. Examples of such news releases are inflation figures, employment decisions, interest rate decisions, manufacturing plans and the national trade balance.

There are no exclusives to news releases: the information is scheduled for announcement in advance and eventually released to the public at the same time. This release of data allows CFD traders to benefit from relatively predictable price volatility. In such trading environments, “insider information” is not a requisite for understanding the workings.

A very good example of market-influencing releases is that of the US Nonfarm Payrolls that come up on the first Friday of every month. Many analysts regard this particular statistic as the best indicator of the condition of the US economy, because it details out the total number of jobs created every month. The data of US Nonfarm Payrolls is so influential that upon its release, it instantly causes extreme price swings in every asset class.

The resulting price activity then creates opportunities for CFD traders to profit. And because a particular market’s news headline could effect a change in other countries’ markets, CFD traders can immediately identify the later price direction in these other countries or continents.

The biggest influence of news events is on CFD positions currently open on the market. This keeps CFD traders on their toes when a major news release is announced. It is usually unwise to open a big position before the announcement of a major news event, most notably news releases based on interest rates and corporate earnings.

The risk is always higher for CFD traders when they open positions prior to major news releases. Why, because the success of your position will fully rely on a positive outcome of the economic data report—which is almost impossible to predict. That being said, it is much more prudent to commit to a new CFD position only when the risk of a news event has elapsed.

News Release Schedule

More often than not, the schedules of market-influencing news releases are fairly predictable. News such as corporate earnings reports are announced every quarter; dividend announcements are scheduled in advance. Unfortunately, most news affecting CFD positions like management change or merger & acquisitions trades often come by surprise.

For open CFD positions, sudden news releases like these ones could affect them negatively. However, CFD traders who constantly monitor the news feeds can minimise the risk of the effect of sudden major news events by acting on key developments. There are also lots of CFD brokers which are monitoring the news for their traders to make it as simple as possible for them to trade. One of the most popular CFD brokers monitoring the news is Plus500, CFD Global and eToro. You can read the detailed review about the Plus500 platform here, review of CFD Global here and the review of eToro here


CFD traders who trade on information usually fare better than those who don’t. By staying updated with the times, these CFD traders can leave successful trades open and can limit their losses by closing losing positions early. Constant news monitoring is the key to every successful CFD trader. Keep in mind, however, that CFDs are very complex instruments and people lose more money than they make on it. But by using the news trading strategy, a lot more profit could be made than losses. If you are not sure if trading is the right thing for you than you should maybe consider getting your money invested into managed accounts. You can find more information about managed forex and CFD accounts in this article here:

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Stefan Grasic (Dipl.-Jur) is the World Wide Director of research for Business24-7 and has considerable experience in the financial and investment niche, but also enjoys writing articles for the general readership. Stefan is an active Crypto, Forex and general investment researcher advising blockchain companies at their start up level. He keeps fit by mountain biking, surfing, skiing and lots of other adrenaline sports.