Trading the news

Trading the news is a technique to trade equities, currencies and other financial instruments on the financial markets. Trading news releases can be a significant tool for financial investors. Economic 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'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 make a profit by trading financial instruments (stock, currency, etc) just in time, and in accordance to the occurrence of those events.

Automatic

Algorithmic trading on news events is a reality. Also known as programmed trading, it is not a new phenomenon, but it is increasing in popularity since the early 2000s. A third of all stock trades in the United States were driven by automatic algorithms in 2005, some studies estimate. Algorithmic trading allows investors to fine-tune their computers to scan live news feeds and watch for items affecting any listed company.

ee also

*Stock trader
*Trader