A novel way to trade? Speeches

Discussion in 'Trading' started by applejuice, May 21, 2012.

  1. Hi,

    I don't do this, nor do I intend to. But I'm interested to know if anyone around here does.

    Every week there are a good dozen or so fairly significant speaker events. Most of the time they don't cause significant market movement, in my experience, but occasionally you'll see the market shift several ticks on the back of something a Central Banker/Finance Minister/PM says.

    Of those speeches reported in popular subscription news service calendars, I am not certain if it is possible to watch them all - and many will surely not even be in English?

    However, I'm quite certain if you actually watch some of these speeches live, you will pick up on some points before they are reported on Reuters terminal (which I also watch), and possibly you could found a profitable strategy on it. After a year of doing this you'd probably be nicely clued up on macroeconomics, and the types of phrases + speakers that/who are most likely to cause a stir.

    Any thoughts?
     
  2. The whole prop arcade business relies on this strategy. How do you think a London trader made a million in 20mins on Trichet saying "monitor closely" and bought and named a race horse that. Hardly a novel strategy but certainly workable.
     
  3. I would guess that major positions are established well before the speech. You are running the high risk of discounted action.
     
  4. achilles28

    achilles28

    Correct me if I'm wrong, but 10 years ago, there wasn't half the economic news there is today. Seems like a cottage industry for front-runners...
     
  5. doublechin, I didn't know that about the horse!

    There was a recent example of opportunity during Mario's ECB speech. I seem to recall, in the opening couple of lines, he said something about inflation expected to remain around 2%... "HOWEVER...". That was the first word which differed from his previous speech, and if you were quick, there was a good seven ticks to be had. Must be plenty of other examples for people who've really done their homework on what the market expects speaker A to say, and what speaker A actually says on the day.
     
  6. mokwit

    mokwit

    You are up against policy maker tipping.
     
  7. wrbtrader

    wrbtrader

    Your brain would need to be "wired" a special way to be able to analyze every word from a important speech while at the exact same time you're eyes/mind are focused on your price charts or data screens to look for trade opportunities...

    Seems like something only a psychotic person could do for a very short time period before men show up in white uniforms at your door with a straitjacket to take you away to their local mental facility for pschoanalysis or psychiatric treatment. Doesn't seem like a strategy that's worth the trip down that road unless you're collaborating with others...someone analyzing every word in some important speech that's working with someone that's analyzing charts or times & sales screens.
     
  8. zdreg

    zdreg

    it is a nice idea. e.g.http://www.nytimes.com/2012/05/19/business/global/candid-comments-shake-russian-stock-market.html
    A Whisper of Nuclear War Spurs a Sell-Off in a Russian Stock Market
    By ANDREW E. KRAMER
    Published: May 18, 2012

    MOSCOW — An unusually candid reference to nuclear war by Russia’s prime minister prompted a sell-off in the nation’s stock market this week, underscoring how nervous traders here have become about worsening relations with the West, a street protest movement in Moscow and an overall slump in emerging markets.
    Enlarge This Image
    Pool photo by Dmitry Astakhov

    Prime Minister Dmitri Medvedev said hasty military incursions could end with radicals in power, a regional war or even to the extreme of using nuclear weapons.

    In remarks Thursday afternoon, the prime minister, Dmitri A. Medvedev, uttered the phrase “nuclear weapons” in a reference to the United States. Although oblique, the comment rattled traders, who sent the main stock market index down 3.5 percent within four hours.

    By the time the smoke had cleared at the end of trading Friday, the damage had been done: a $24 billion drop in the stock market value of Russia’s publicly traded companies.