Direct answer: the idea of closing before news
Closing Before News means you close (or reduce) an open forex trade before a scheduled economic or policy news release starts, with the goal of avoiding the uncertain price swings around that release. This is a risk-management concept related to timing: it does not claim you will profit, and it does not remove uncertainty—execution and market movement can still differ from the plan.
How it works: stable mechanics versus variable conditions
A worked example is easiest when you separate stable mechanics (how you calculate P/L) from variable conditions (what actually happens in the market).
Stable mechanics (calculation steps):
- You enter with a position size (for example, 10,000 units).
- You choose a target time window to close before news.
- You compute profit or loss using the difference between entry and exit prices, then subtract costs.
- You include spread and commissions as assumptions to make the calculation checkable.
Variable conditions (what can change):
- Market volatility around the scheduled event can change the exit price.
- Execution quality can vary (slippage, partial fills).
- Provider-specific costs (commission, swap/financing, and how spreads are quoted) affect results.
Worked example with transparent assumptions
Scenario setup (all assumptions are explicit):
- Trade type: long EUR/USD (you buy EUR, you expect EUR to appreciate versus USD).
- Position size: 10,000 EUR.
- Entry: you open at 1.1000.
- Exit plan: you close 10 minutes before a scheduled news release.
- Assumed trading costs:
- Spread at entry: 2 pips (0.0002).
- Spread at exit: 2 pips (0.0002).
- Commission: 0 (assumed for simplicity).
- Pip value assumption: for a 10,000 EUR position, assume 1 pip corresponds to 1.00 USD. (This is a simplification for the example; different conventions can change pip value.)
Price calculation assumptions for the worked example:
- Because this is a worked example with no real-time data, assume the “true mid” at entry is 1.1000, but your executed buy price is 1.1000 + 0.0002 = 1.1002 due to the buy-side spread.
- Assume the “true mid” at your exit time (10 minutes before news) is 1.1010, but your executed sell price is 1.1010 − 0.0002 = 1.1008 due to the sell-side spread.
Step-by-step P/L:
- Entry executed price (buy): 1.1002
- Exit executed price (sell): 1.1008
- Price difference: 1.1008 − 1.1002 = 0.0006
- Convert to pips: 0.0006 / 0.0001 = 6 pips
- Estimated profit: 6 pips × 1.00 USD per pip = +6.00 USD
- Subtract commissions: +6.00 USD − 0 = +6.00 USD
Key point: this +6.00 USD is not a forecast. It is the result under the specific assumptions above (fixed spreads, no slippage, and mid-prices exactly as assumed). If any assumption changes, the number changes.
Limitations and risks (including at least one failure mode)
Material limitations:
- Timing does not guarantee stability. Even “before news” can overlap with pre-news positioning, widening spreads, or thin liquidity.
- Execution can fail the plan. A common failure mode is slippage: your actual exit price may be worse than the assumed sell execution price, reducing profit or increasing loss.
- Costs may be incomplete. Some platforms also have financing (swap) effects for holding over time; those effects depend on the time you actually close and platform terms.
Independent verification checklist:
- Verify your entry and exit execution prices (not only chart mid prices).
- Recalculate P/L from your trade history: price difference (in pips) × pip value, minus reported commissions and any other fees.
- Compare your actual spread and execution timing versus the assumed spreads and “10 minutes before news” window.
Verification or next question
If you want to validate this concept further, take one of your own historical trades (or a hypothetical one you fully specify) and replace each “assumed” number with the exact execution data you have. The goal is to check whether your cost and execution assumptions match reality—especially around timing. If you can’t get execution-level data, treat any worked number as a calculation example rather than an expected outcome.