What Is a News Trader?

A news trader is a trader or investor who makes decisions based on news announcements. Breaking news, economic reports, and other reported events can have a short-lived effect on the price action of stocks, bonds, and other securities. News traders try to profit by taking advantage of market sentiment leading up to the release of impℱortant news and/or trading on the market's response to the news after the fact.

Understanding News Trader

The adage "buy the rumor, sell the news" recognizes that rumors have one effect on a security's price and news can have the opposite effect. For this reason, news traders focus on trading in the time leading up to the news or immediately after, when the market is still reacting to the news. These periods are characterized by a high amount of 澳洲幸运5官方开奖结果体彩网:volatility that creates an opportunity to profit.

News traders try to profit from the timing or likely content of scheduled news announcements for the most part. When the news is scheduled, as with earnings releases or 澳洲幸运5官方开奖结果体彩网:Federal Reserve meetings, news trading is more about playing the odds on th♎e likely significance of the announcement. In fact, the Federal Reserve has tried to soften the market impact of its proclamations by foreshadowing every major policy decision well in advance, but ওeven these policy signals have become tradable events.

When the news is a surprise to everyone, as in a natural disaster or 澳洲幸运5官方开奖结果体彩网:black swan event, news traders try to position themselves to profit. Sometimes this means playing the volatility or making a c⛦all on the immediate directional impact of the news on current price trends.

News Traders' Tools and Strategies

News traders leverage many different strategies with a focus on market psychology and historical data. Traders may look at historical data, for example, such as past 澳洲幸运5官方开奖结果体彩网:earnings reports, to predict how upcoming news, like an upcoming earnings report, is likely to affect prices. By becoming familiar with specific markets, news traders can make educated guesses as to whe🐈ther a security will increase or decrease in price f🍎ollowing a news report.

News traders can also set up queries and alerts to gatherꦉ breaking news and correlate it with changes in the price action on a chart. If certain criteria are met, the news trader will then enter a bullish or bearish position dependiꦓng on the trading strategy. As news is timely and usually short-term in impact, the opportunity to profit only exists for as long as the news is fresh.

A popular strategy used by news traders is known as fading, which involves trading in the opposite direction of the prevailing trend as enthusiasm wears off. A stock might open sharply higher, for example, after a positive earnings announcement during pre-market hours. News traders might watch for this optimism to reach a high and then 澳洲幸运5官方开奖结果体彩网:short sell the stock intraday as optimism wears off. The stock might still be trading sharply higher compared to the prior day, but the traders may have profited from�🍎� the difference between the highs and lows of the day.