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* **Assessing Risk Before and After News Events**: News events can dramatically increase market volatility, meaning prices can fluctuate wildly and rapidly. Before a major news announcement (like an interest rate decision by the Federal Reserve or an earnings report), the market often experiences a period of uncertainty. Traders might hesitate, leading to a build-up of potential price movement. Once the news is released, the market reacts, and this reaction can be swift and significant. Therefore, assessing the potential impact of news events on your risk profile is critical. Consider the following:
