Reacting to the News

[bencolling]

Are there any reasons for why simply buying/selling a spreadbet on good/bad company announcements would not work?? I have been successfulish on the demo accounts by simply watching the regulatory and FX news headlines and buying/selling accordingly. Are there any reasons why this would not work?? Perhaps the spreadbetting firm adjust their prices in some way to prevent this working. On some occations i have seen some news, reacted staright away but the spread had inceased on the particulat share, reducing my gains.

In addition, can anyone suggest the best and fastest source of company news?? I currently use the news offered by TDwaterhouse with my share dealing account.

 

[Dow Dog]

The response to good news is not always a rise in the market and the response to bad news is not always a fall in prices.

I wish it was as easy as that but market responses to news often defy logic, and common sense.

This is to be expected because markets move because of peoples' behaviour which is often totally irrational.

 

[PhilHughes]

How are you getting on - I'm looking at a similar spread betting stratergy - good news/ bad news a quick look at a chart and go!

only just starting out - how are you getting on with it? any particular methods - software you been using ?

 

[PhilHughes]

news update

Have you tried WWW.UK-wire.com

I've been checking out their top announcement board and there's some good reactions after these.

i have subscribed to Financial times just to view their Lex column which is apparently one of the most influencial - not many stories come out about the companies I'm looking for - but when they do they always move well.

it just allows you to see what will be in the paper tomorrow - giving you a good head start.

let me know how your getting on !

 

[Uncle]

I would suggest whatever medium the private individual has access to, it will always follow the sources of Marketmakers, and therefore any news, good/bad will be reflected in the price offered at the time one wishes to place a trade.

The charts will always give you a picture of market trends, and I would therfore suggest to familiarise oneself in reading charts will be far more productive in trading.

Remember the trend is your friend !!!

John

 

[Trader333]

I agree with Uncle and the other thing to remember about trading News stocks is that all you can presume is that the stock may make a good move. If you try and determine which direction that move will be then you will get your fingers burnt as it is often opposite to what would appear to be the obvious.

So if you wish to trade them then react to what you see happening and not what you think should happen.


Paul

 

[PhilHughes]

results follow market makers

Uncle - can you ellaborate a bit for me on the market makers - It's something I know nothing about - any chance of a brief run down on these guys - and is it possible to view the moves the trades they are making - will this be a reliable signal ?

cheers
Phil - wrexham

 

[Uncle]

The operate in all markets worldwide, and has the title implies they hold stock in all securities and trade these subject to supply and demand.

Quite definately you will never receive a reliable signal form M.M.'s
Go the the following link:

http://news.bbc.co.uk/2/hi/business/3584317.stm

 

[CityTrader]

The operate in all markets worldwide, and has the title implies they hold stock in all securities and trade these subject to supply and demand.

Not quite. There are to all intents and purposes no market makers in the top 350 stocks quoted in the UK. There are dozens of other markets worldwide, where the prices are determined by supply & demand ( assuming sufficient liquidity) rather than set by MM's.

In response to the original question, put simply,the stock market anticipates news. And there is a great adage that the market trades by, which is " better to travel, than to arrive" - i.e the expectation of good news will normally prove a better price mover than the arrival of the anticipated news. This ( obviously) doesn't apply to unexpected news, but then just as you can see the RNS announcements, so , simultaneously, can the market makers ( assuming it is a quote driven stock)

Wayno

 

[LittleWhiteBull]

In Toni Turner's 'Beginners Guide to Day Trading' she quotes that people 'Buy the Rumour and Sell the News', but that buying the rumour is of course risky business. Once the rumour is bought you are left with the news, which usually means the price has already reached its tops.

I have check this over the last few days and in nearly every case it seems right, but today got caught out by trying to Short on the news (price had gapped open high) - price didn't drop - just ticked along sideways all day. Another lesson learned.

Toni advices that you should listen to the news for bad news so you can off load stocks you are holding pretty quick but don't buy the news.

Not been trading long enough to confirm the above totally but seems to make sense.

 

[schoe]

You should speak to Mr Charts he is an expert in trading the news.

 

[TheBramble]

In Toni Turner's 'Beginners Guide to Day Trading' she quotes that people 'Buy the Rumour and Sell the News',

LWB - I don't think it's the likes of us that buy the rumour.

It's 'them' on the inside, 'those' in the know . By the time it's out in the public domain (when 'we' get it) it's time for 'them' to sell.

PLUS

I personally have found it quite a fruitless activity to try and guess which way a stock is going to react to specific news. Sometimes, what 'should' have been good news, was less good than expected, and the stock bombs. And vice versa of course.