CPI trading strategy: how to trade CPI news releases
welcome back to stay sharp — our weekly newsletter where we share data-driven trading strategies that actually work.
last week, we covered everything we've built at edgeful in 2025 and what's to come for the rest of the year. the feedback we got was incredible — it's clear you're as excited about these new features as we are.
this week, I want to show you how to use one of our most interesting, news-related reports for CPI trading: the CPI reaction report.
by the end of today's stay sharp, you'll know how to analyze the data and potentially use the 15-minute CPI reaction to set your bias for the rest of the session. mastering CPI news trading can transform how you approach these volatile market events.
and if you'd rather watch a video of me going through the whole report and how you can apply it to your CPI trading strategy, check this video out: https://www.youtube.com/watch?v=Mmnz5YMsV_A
table of contents
- why most traders get CPI wrong
- introducing the CPI reaction report
- the YM data that surprised me
- understanding the two ways to measure performance
- why ticker selection is everything
- the 2 biggest mistakes traders make with the CPI reaction report
- how to realistically use the CPI reaction report in your trading
- frequently asked questions about CPI trading
why most traders get CPI wrong
every month when CPI comes out, I see the same thing happen in CPI trading...
the number drops at 8:30AM ET, the market moves quickly in one direction, and traders scramble to get positioned. they see a green 15 minute candle and think they should be bullish for the rest of the session — or they see a red candle and are short bias for the rest of the day.
but here's the problem — they're trading pure emotion while completely ignoring the data that actually predicts where the session will close. they're making decisions based on that initial CPI reaction without understanding the historical correlation between that first move and the actual session outcome.
this emotional approach is one of the 4 reasons why traders lose money, especially during high-impact news events like CPI releases.
that's exactly what our CPI reaction report will solve for your CPI trading approach:
introducing the CPI reaction report
the CPI reaction report tracks something incredibly simple but powerful for CPI trading: when the initial 15-minute reaction at CPI is green, how often does the NY session actually close green?
let me walk you through exactly how this works with a real example...
the YM data that surprised me
here's how the direction of the first 15min post CPI impacts YM's close over the last 6 months:
- 6 months: 100% of green reactions led to red closes (2/2), while 75% of red reactions also led to red closes (3/4)
- 1 year: 80% of green reactions led to red closes (4/5), with 57% of red reactions leading to red closes (4/7)
- 2 years: the correlation weakens to 50% on green reactions (5/10), but red reactions still show 71% correlation to red closes (10/14)
so what does this mean for your CPI trading strategy?
if you're trading YM on CPI days, the data is pretty clear — green initial reactions are incredibly bearish. with an 80% probability of a red close over the past year (and 100% in recent months), you shouldn't be bullish if the first 15min post CPI is green.
on red reactions, you can also lean bearish — with around 57-75% leading to red closes depending on your timeframe.
the takeaway: YM has a tendency to close red on CPI days, especially after green initial reactions. when you see initial strength in CPI news trading, the data suggests patience might be the better action to take.
of course, this isn't about blindly shorting every green reaction. it's about having data to inform your bias instead of trading on gut feel. when you know the probabilities in CPI trading, you can make more informed decisions about what side to take or if you should wait for a better setup.
understanding the two ways to measure performance
here's something crucial that most traders miss when using the CPI reaction report for their CPI trading decisions...
the report gives you two different ways to measure performance, and picking the right one for your CPI trading style is critical.
open-to-close measures from the session open to the session close. this is what futures traders typically care about — did the actual trading session finish higher or lower than where it opened? this method ignores overnight gaps completely.
previous-close-to-close is how the financial media reports performance. when you hear "TSLA is up 3% today" on CNBC, they're talking about where it closed today versus where it closed yesterday. this captures the overnight gaps and is usually better for swing traders using CPI trading strategies.
let me show you why this matters...
on February 12th, if you looked at open-to-close, the session was actually green.
but using previous-close-to-close? it showed red because we gapped down overnight and closed lower than the prior session did.
the reason I'm highlighting this is because at edgeful, we want to give you as much customization as possible for your CPI news trading approach. if you're a futures / day trader, it's best to stick with the open to close calculation. swing traders who care about overnight gaps can use the previous close to today's close calculation.
why ticker selection is everything
I can't stress enough how important it is to make sure you're analyzing the data for your specific ticker across every report — and especially so using the CPI reaction report for CPI trading.
why?
because the data is dynamic. here's a reminder on the YM data I covered above:
- 6 months: 100% of green reactions led to red closes (2/2), while 75% of red reactions also led to red closes (3/4)
- 1 year: 80% of green reactions led to red closes (4/5), with 57% of red reactions leading to red closes (4/7)
- 2 years: the correlation weakens to 50% on green reactions (5/10), but red reactions still show 71% correlation to red closes (10/14)
but let's analyze another ticker for CPI trading — this time TSLA:
- 6 months: 60% of green reactions led to red closes (3/5), while 100% of red reactions also led to red closes (1/1) — only 6 total for the sample size (1 CPI reaction per month)
- 1 year: 44% of green reactions led to red closes (4/9), with 67% of red reactions leading to red closes (2/3)
- 2 years: 47% of red reactions lead to red closes (7/15), while red reactions show 56% probability of a red close (5/9)
so while YM gives you a massive edge fading green reactions in CPI news trading, the data for TSLA isn't nearly as clear.
this is exactly why I keep hammering this point — you cannot take patterns from one ticker and apply them to another in CPI trading.
institutional vs retail CPI trading approaches
while retail traders often react emotionally to CPI releases, institutional traders and trading firms use systematic approaches similar to what we've outlined here. the key difference in professional CPI trading? they have the discipline to follow the data, not their gut.
this data-driven approach is similar to how professionals trade other major events like FOMC announcements, using historical patterns rather than emotional reactions.
the 2 biggest mistakes traders make with the CPI reaction report
after hundreds of our members trade using this report for CPI trading, here are the mistakes that cost them money...
mistake #1: using old data like I just covered above, you have to make sure you're always using the right data over the right timeframe, on the right tickers. some traders screenshot the report in january and think it's good for the whole year. market correlations change! what worked six months ago in CPI news trading might be completely reversed now. you need to check the data before every CPI release.
mistake #2: not accounting for sample size when YM shows 100% correlation on just 2 instances, that's interesting but not statistically bulletproof for your CPI trading decisions. always look at the sample size. the 1-year data with more instances carries more weight than the 6-month data with only a handful.
how to realistically use the CPI reaction report in your trading
when the next CPI release rolls around, here's exactly what you should do for successful CPI trading:
first, watch the 8:30AM ET release and note the 15-minute reaction candle. is it green or red? that's your starting point for CPI news trading.
next, pull up the CPI reaction report for your specific ticker — not YM unless you're actually trading YM. check what the historical correlation shows for your instrument.
then use that data to set your bias for the session. if you're trading YM and see a green initial reaction, the data says be cautious about going long. if you're trading TSLA and see a red initial reaction, you've got a 67% probability of a red close — that may be a bias worth taking for the rest of the CPI trading session.
again, the data should dictate your decision-making in CPI trading, not your feelings.
for more data-driven approaches, check out our guide on top day trading strategies for beginners which includes other systematic trading methods.
staying updated on CPI releases
CPI data releases on the second tuesday of each month at 8:30 am et. mark your calendar for august 12th and use the CPI reaction report to prepare your CPI trading plan in advance. staying prepared for these inflation data releases is crucial for consistent trading success.
frequently asked questions about CPI trading
what is CPI in trading?
CPI (consumer price index) is a monthly economic indicator that measures inflation by tracking the average change in prices paid by consumers for goods and services. in trading, CPI releases at 8:30 am et can cause significant market volatility, making it a key event for day traders and futures traders to navigate. understanding CPI is essential for developing effective trading strategies around these high-impact news releases.
what does CPI mean in trading?
CPI trading refers to the specific strategies and approaches traders use around the consumer price index data release. it involves analyzing the initial market reaction to the CPI numbers and using historical patterns to position trades for the rest of the session. successful CPI trading requires understanding how different assets react to inflation data and having a systematic approach rather than trading emotionally.
how do you trade CPI news?
the most effective CPI news trading approach is to wait for the initial 15-minute reaction at 8:30 am et, check historical correlations for your specific ticker using tools like the edgeful CPI reaction report, then set your trading bias based on probability rather than emotion. avoid chasing the initial spike and instead use data to determine whether to fade or follow the move.
why is CPI important for day traders?
CPI releases create significant volatility and trading opportunities as markets react to inflation data. for day traders, understanding CPI patterns can provide a statistical edge in predicting session direction. the initial reaction often sets the tone for the entire trading day, making it crucial to have a data-driven approach to CPI trading.
what's the difference between CPI and PPI in trading?
while CPI measures consumer-level inflation, PPI (producer price index) measures inflation at the wholesale level. both can impact markets, but CPI typically generates more volatility as it directly influences federal reserve policy decisions. traders often use similar reaction-based strategies for both releases, though the patterns may differ significantly.
putting it all together
the CPI reaction report is just one example of how we're turning emotional market events into tradeable data for better CPI trading results. instead of reacting to that initial spike and hoping for the best, you're using actual historical patterns to guide your decisions.
next time CPI comes around (which will be on August 12th 2025), pull up the report for whatever you're trading. see what the data tells you about CPI news trading opportunities. you might be shocked at what you find...
and remember — the market doesn't care about your emotions or what you think should happen. it only cares about what actually happens. so let the data guide your CPI trading strategy, not your gut.
