You may have heard this term before and wondered what trading the news means? In short it means to using news to make decisions on how and when to make financial trades.
Many traders attempt to trade the news and fail miserably, this is because they don’t understand what is taking place at the time of the release. The number one biggest mistake a fledgling news trader can make is to try and capture the breakout of the release.
One of the most challenging parts of trading the news can be getting filled where you want. What makes this trade so special is the fact that this is the premise behind the trade.
Although this is a trade that does not happen very often it is a trade that offers some of the greatest risk to reward ratios I have ever experienced in day trading. The thing with news trading is it is notorious for wide spreads and poor fills.Now we need to consider why this is so, so that we can understand the advantage that this trade offers over other strategies.
Trading is a zero sum game, what this means is that for every buyer there has to be a seller or there is no trade. This is exactly what happens around these major announcements, many players are extremely risk averse at these times and therefore remove all there standing orders that they have in place and sit on the sidelines until after the volatility generated around news time has died down. The outcome of this is a major reduction in liquidity and therefore the chances of finding someone to take the other side of your trade are significantly reduced.
With the internet, there are literally thousands of sources of news that can be found. This is both a blessing and a curse. The first problem is that many of these sources, especially when it comes to financial related data, may not be reliable. The time that is spent wading through the muck and mire of people on social media promoting their pump and dump scheme, or advertisements for the next greatest health supplement keeps you from finding the gem that can actually make you money.
Second, even if you are able to first filter only the useful information it is still all from separate places. Many newspapers and financial services with several tabs you are still having to do searches on each of these sources just to look at a single stock.
A trader really wants 2 things to be successful.
First, they want valuable information, and second they want this information in a timely manner.
This way the information can be used to make the best decisions as fast as possible. Trading the news is easy with NewsScraper.com. It does the filtering for you and puts all the useful information you need for making timely financial decisions at your fingertips. With personalized filtering it provides only the information that you deem relevant for the stocks, industries, markets, or the economy that you are interested in. As soon as the news is available it is delivered so that you can make those quick decisions that will help you get ahead.
You can learn more about this great trading tool at NewsScraper.com