How Can You Trade Around Economic Data?
The capital markets can be volatile after an economic release especially if the data is expected to have a high impact and the release was different from expectations. The price of an asset or an exchange rate can gap up or down following a release, and you should expect volatility. You will find that the bid-offer spread ahead of a release will generally widen, and immediately following a release you might not be able to get a firm price. Generally, the markets settle in within minutes of a release.
The safest way to trade economic data is to wait and see what actually happens before you make a decision. If you have a position on ahead of a release, be cognizant that you could experience whipsaw price action. Once the economic data is released, evaluate what has occurred relative to expectations. You will then be able to make an informed decision.
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