I always used to think that the spike that follows news releases was caused by lots of new orders coming in to the banks so the price moves. If that was true then as long as you were faster than everyone else, you could get in at the bottom/top of a spike and profit from it. That's what a lot of these news trading signal providers want you to believe. I recently found out that this is total BS. The spike is caused because the banks themselves (e.g. Bear Stearns, JP Morgan, Deutsche Bank) automatically adjust their prices in response to the news. It's all done without human intervention and is instantaneous - there is no way of getting in before the spike if your orders are going straight to banks (as with for example EFX and Currenex). If you're with a market maker like Oanda or FXCM then you can only profit from taking advantage of the delay between their prices and bank prices - which understandly they try to stop you doing. Of course there are still ways of profiting from news releases - fade the spike or trade the pullback for example - but getting in before the spike as these silly and expensive news signal providers would have you believe is not an option.
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