Trading the News

[ukdaytrader]

Is it possible to trade the news ? I will list out the trades based on news after the event........lets see if this is profitable.


Sold Marstons plc (LSE listed) for GBP 165.5 based on financial times article on Saturday and the fact that these guys made a dividend payment despite rumours of a rights issue. Why would any finance director pay out dividends then incur the costs of doing a rights issue on top of that. This has been hedged against FTSE100 at 4323.


Sold Porchase AG based on Bloomberg story and the size of their debt. The sale was at Euro 42.31. This has been hedged against DAX at 4842.

 

[foredog]

THis type of news trading is more likely to be profitable than what most on this forum consider news trading, ie trying to nick 50 pips on release of NFP etc.

Also i think stocks are easier to trade on news as there are less underlying factors to affect their movement.

 

[TheBramble]

You're trading on information that is, in theory, already factored into the price. While I think that particular theory (EMH) is so badly tattered as to be pretty much completely discounted, the fact that you can trade in this way and sometimes get it right is an altogether different story.

Price will undershoot and overshoot the information momentum imparted to it on enough occasions for it to seem like it’s a workable long-term strategy. With whizzo Money and Risk Management systems you can tip the odds even more in your favour and possibly look good for a long stretch, but make no mistake, you’re trading on the back of similarly misguided individuals who don’t really know what they’re doing and happen, just happen, to bias in one direction or the other sufficiently frequently for the resultant price action to ‘make sense’.

Your lucky streak will run out when their aggregated assessments regress to the mean, which they will do far more often than not, and, on average (LOL) you’ll be out, if only on costs.

If you’re going to trade the news you need to be ahead of it, not behind it.

 

[ukdaytrader]

If you are to exit now and assume 1000 share purchase, you should be about even on the DAX and gained on the Porsche Short. Buy back at 41.79 520 Euros less commission of of around 83 Euros . Net profit for the trade = 437 Euros.

I will put other 'news' trades on as I do them and see if we revert to a zero sum game.

Bramble - I think for any trading you need to a have a little bit of luck on side ??

The marstons are certainly not looking as well as I would have liked...but I will hold them till the end of the week.

 

[TheBramble]

Bramble - I think for any trading you need to a have a little bit of luck on side ??

Absolutely. My trading style is based on expectations of 100% luck and 0% skill. Worked OK so far...

 

[ukdaytrader]

Absolutely. My trading style is based on expectations of 100% luck and 0% skill. Worked OK so far...

You implying ever one of your trades is a profit ?

 

[Trader333]

Bramble - I think for any trading you need to a have a little bit of luck on side ??

If you really believe this then you will lose all your money and it will just be a matter of time before you do. You are in essence taking the approach of a gambler and The Bramble was being tongue in cheek with what he said to you.


Paul

 

[ukdaytrader]

There is no way that anyone you puts on 100 trades will get them all in the money. It is on the balance of probabilities that you make money. You can make educated transactions based on your own analysis, but there is no way you will be right all the time.

Furthermore you cannot protect against unforseen events, so today for example in the absence of the N Korea issue, french stocks should have risen given the positive consumption data.

Again if you looked at the USD / GBP Sterling a few days ago, the S & P announcement on UK debt was a surprise and may have closed out quite a few trading positions based on stop losses. (even if it was a short term blip)

If you are sitting on an equity after doing analysis and there is a company announcement on fraud, you will lose your money.

The absence of shocks whilst you are trading your positions is certainly luck.

 

[Trader333]

There is no way that anyone you puts on 100 trades will get them all in the money.

He was joking

The absence of shocks whilst you are trading your positions is certainly luck.

That is not how I see it, I would say that when in a trade and adverse news hits it is bad luck but to rely on luck as a basis to trade will result in total loss of capital. If you don't believe it then try it and see what happens.


Paul

 

[ukdaytrader]

OK I don't disagree with that........but I'm not trading on positive luck, just the absence of negative luck.

 

[Trader333]

I'm not trading on positive luck, just the absence of negative luck.

Same as me then but sometimes news happens unexpectedly and cannot be avoided


Paul

 

[ukdaytrader]

OK Ive also closed Marston at a very small profit like £25. Made bit more on the FTSE hedge like around £150

 

[ukdaytrader]

OK another post news story- bought S&P After announcement of the positive consumer (like 2 minutes after) figures..........Still holding !

 

[ukdaytrader]

For those that are still holding the sale on the sale of Porchse and bought the hedge, would have been riding on some exceptional good luck and made a killing on the DAX.

Porchce has predicted underperformed the index, but no where near what I could have predicted.

 

[ukdaytrader]

Porsche continues to get hammered.

 

[foredog]

Are they being driven lower?

 

[traderboi29]

You're trading on information that is, in theory, already factored into the price. While I think that particular theory (EMH) is so badly tattered as to be pretty much completely discounted, the fact that you can trade in this way and sometimes get it right is an altogether different story.

Price will undershoot and overshoot the information momentum imparted to it on enough occasions for it to seem like it’s a workable long-term strategy. With whizzo Money and Risk Management systems you can tip the odds even more in your favour and possibly look good for a long stretch, but make no mistake, you’re trading on the back of similarly misguided individuals who don’t really know what they’re doing and happen, just happen, to bias in one direction or the other sufficiently frequently for the resultant price action to ‘make sense’.

Your lucky streak will run out when their aggregated assessments regress to the mean, which they will do far more often than not, and, on average (LOL) you’ll be out, if only on costs.

If you’re going to trade the news you need to be ahead of it, not behind it.

my thoughts exactly!

 

[ukdaytrader]

Knowing that there are lot of misguided individuals out there only assists in the momentum. Depending on the speed of execution of these misguided individuals there is certainly sufficient time to get in and out as long as you take the profits as soon as the appear and dont wait around.