What effects price is how traders/investors interpret the news. Having advanced knowledge may not help.
Along that news release chain there are always leaks and hacks before news gets to the released to the public stage. There are entire strategies built around trading the price drift leading up to an earnings release. Every years there are multiple stories like this one https://www.wsj.com/articles/overse...cking-secs-corporate-filing-trove-11547562262
Technically when you have a profitable day you were successful in leveraging something. Sometimes you know what that is and other times you don't know. When you stick with a strategy the strategy is the leverage.. Not to be discouraging your efforts but I can tell you that you are under estimating the effort with HFT. Trading with a bot doesn't mean you should own a HFT setup. You are competing with larger players who have more resources than retail. Beyond a research stage it is unlikely to yield real life usecase. Even if you build a poc you still need a larger player as the first customer. Selling your poc to someone else may be financially better yielding than going on your own. Commonly available HFT sw only provide generic algorithms. The trading strategy requires proprietary development and often consulting to implement it using the framework. Noone sells a money making machine.
Fully agree... having worked on HFT systems I know full well that I have no chance as a retail trader. It's like racing a Ferrari with a tricycle. BUT, If I can become aware of an event _before_ the HFT algos get it... if I can discern the event earlier in the flow... profit.
Interesting. And insightful. Curious - how do you typically monetize this? I mean - do you have algorithms similar to the automated systems you mentioned or do you do it manually by pre-planning different scenarios? There were a few news traders in Schager's latest books. Kind of interesting. I believe one of them used an algorithm. The other traded manually.
The first reaction will be very quick but how often do we see markets rebound within hours after a bad news?
I have a semi-automated system. i.e. My system processes both news and quotes in realtime, and when my algorithm detects a possible buy or short, it pops up a screen with the relevant news and other info displayed. The amount and price fields are already filled in so all I have to do is press the Enter key. Basically I try to make the trade decision in under 2 seconds. Not fully automated, but close. Too much can go wrong with fully automated systems. BTW, what is the name of Schwager's book that mentions news trading? Thanks
I don't think retail trader can beat HFT trading the initial reaction directional. But there may be profit trading the post-earnings announcement drift (PEA). Accounting papers call it also SUE (standardized unexpected earnings). It is a well studied phenomenon in the accounting world. If there is an underreaction to the news, price will tend to drift for months in the direction of an earnings surprise well into subsequent earnings which supports market inefficiency theory. Underreaction is one of several possible reasons for PEA. https://www.sciencedirect.com/science/article/abs/pii/016541019090008R https://www.jstor.org/stable/2491062 https://www.degruyter.com/document/doi/10.7208/9780226426983-009/html