But why would the stock of a company that receives FDA approval go down? I understand that this may happen in other news that require further interpretation, there we agree
Those that say you can't trade on the news because of algo's are dead wrong. You can have a news story, and the market goes up for 5 min then goes right back down even harder. If an algo was long they get crushed. The point of getting news is for trend bias. After that you need to use PA and TA for trade setups. I have been long or short after certain news events and price has not moved for over 20 min. Obviously, I am not talking about major events like unemployment numbers. Finally, the news if strong should create a trend. The trend gets stronger as those on the wrong side start to get stopped out of their positions. Except for major news, price does not instantly move. And if a price gap occurred due to major news, the algo's were not able to get in before the gap since you will see no trades occurred within the gap. Here is a scalping trade setup, not sure if it's mentioned in books. In the early stages of a parabolic move, you can just go long or short with a defined stop and target.
First of all i never said trading the news isn't possible, however trading 5 minutes after the news isn't trading the news event, that's trading the price action that came from the news. A news trading algorithm is long out by the time 5 minutes have passed. If you want to trade the actual news release you only have seconds to react since the initial move is over in seconds, thanks to the algos. If the news was that massively surprising or for example with press conferences then yes it could last for a long time and create a trend, but most of the news event main reactions just last a few seconds, a quick spike up or down and then back to the way it was before. If it isn't the OPs intention to trade the initial reaction he doesn't need a prime news service, since if he wants to get in after a few minutes to trade the follow up it doesn't matter if you got the news with a little delay, but that is not trading the news.
DevBru, is that is exactly what I am doing, entering a few seconds after the news to take advantage of the rise. I agree with you that in the minor news (those that make the stock go up between 1 and 5%) it is difficult to take advantage of it. But in big news like FDA approvals (which skyrockets the price 40-50-60%) for me if possible. For now at least.
Xenith is a shit product, nothing else than a glorified charting app. The news feed is worse than some of the completely free reuters feeds elsewhere.
Exactly. It's a stupid assumption to make that an algorithm has the capability to enter a long on a news release but can't square the position at any millisecond after if price action reverts.
I contacted the folks at Metastock and they told me that Xenith is exactly the same as Refinitv's Eikon news feed, that at most they show a few less news but all of it is in real time. Did you try it? Are you sure it doesn't work? Your comments help me so I don't waste time