Trading the news is a technique to

trade Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market. An early form of trade, barter, saw the direct excha ...

equities In finance, stock (also capital stock) consists of all the shares by which ownership of a corporation or company is divided.Longman Business English Dictionary: "stock - ''especially AmE'' one of the shares into which ownership of a company ...

currencies A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general def ...

and other

financial instruments Financial instruments are monetary contracts between parties. They can be created, traded, modified and settled. They can be cash (currency), evidence of an ownership interest in an entity or a contractual right to receive or deliver in the form ...

on the

financial market A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities include stocks and bonds, raw materials and precious metals, which are known in the financial market ...

s. Trading

news News is information about current events. This may be provided through many different media: word of mouth, printing, postal systems, broadcasting, electronic communication, or through the testimony of observers and witnesses to events. N ...

releases can be a significant tool for financial

investor An investor is a person who allocates financial capital with the expectation of a future return (profit) or to gain an advantage (interest). Through this allocated capital most of the time the investor purchases some species of property. Type ...

Economic An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with the ...

news reports often spur strong short-term moves in the markets, which may create trading opportunities for traders. Announcements about corporate profits, a change in management, rumors of a merger, are events that can cause a company's share price to move wildly up or down. Interest rates, unemployment and export rates, or the

central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union, and oversees their commercial banking system. In contrast to a commercial bank, a central b ...

's policy shifts, can cause a deep change of an exchange rate.

Methods

Manual

Investors trading shares of a listed company know there are certain events that cause the share price to rise or fall — sudden changes in energy prices, a labor strike at a supplier, a poor month for the sales, for example. Trading the news is the technique of making a profit by trading financial instruments (stock, currency, etc.) just in time, and in accordance to the occurrence of those events.

Automatic

Event-based algorithmic trading, also known as programmed trading, is not a new phenomenon. This trading technique has been increasing in popularity since the early 2000s. As of 2009, studies suggested HFT firms accounted for 60-73% of all US equity trading volume, with that number falling to approximately 50% in 2012.Rob Iati
The Real Story of Trading Software Espionage
, ''AdvancedTrading.com'', July 10, 2009 Algorithmic trading allows investors to fine-tune their computers to scan live news feeds and watch for items affecting any listed company.

Social networks in trading the news

Social information is now as powerful as proprietary data feeds. Today

social networks A social network is a social structure made up of a set of social actors (such as individuals or organizations), sets of dyadic ties, and other social interactions between actors. The social network perspective provides a set of methods for a ...

are more than just a space to communicate and share ideas, it has become the information source that can rock financial markets to their ground.

Twitter Twitter is an online social media and social networking service owned and operated by American company Twitter, Inc., on which users post and interact with 280-character-long messages known as "tweets". Registered users can post, like, and ...

alone provides an enormous opportunity for investors and traders: *After

Elon Musk Elon Reeve Musk ( ; born June 28, 1971) is a business magnate and investor. He is the founder, CEO and chief engineer of SpaceX; angel investor, CEO and product architect of Tesla, Inc.; owner and CEO of Twitter, Inc.; founder of The ...

tweeted about a new product line Tesla's shares leaped by 4% ($1 billion of its market capitalization); *On August 13, 2013 Carl Icahn tweets about his large stake in

Apple Inc. Apple Inc. is an American multinational technology company headquartered in Cupertino, California, United States. Apple is the largest technology company by revenue (totaling in 2021) and, as of June 2022, is the world's biggest company ...

He claims that the company is extremely undervalued and adds that he urges CEO

Tim Cook Timothy Donald Cook (born November 1, 1960) is an American business executive who has been the chief executive officer of Apple Inc. since 2011. Cook previously served as the company's chief operating officer under its co-founder Steve Jobs ...

for a larger share buyback. As a result, Apple's shares surged 5% by the end of close on this day.

References

{{Reflist Share trading

Methods

Manual

Automatic

Social networks in trading the news

See also

References