I trade futures and not stocks, and for me, not being aware of key economic reports, or some of the news that may occur during the day can both 'blind side' me on a trade I; as well, there are a number of times that there is a setup into news, or a news reaction that is tradeable. The biggest reaction I have ever been a part of was 9-11 and watching cnbc when the first tower was hit. I suppose that could have been some kind of pilot/plane malfunction, but when that 2nd tower was hit I felt that it had to be intentional and trying a short was worth risking for a fixed stop amount. In later days, anytime you would hear the work anthrax and pushed the short short button you would get a profitable trade. Then I remember a day when a building was hit in Italy and it was assumed to be terrorist activity; as soon as the news confirmed that there was no terrorsit activity I went long against the reaction; there was a similiar situation somewhat recently from the Eiffel tower fire, and a number of profitable buys from saddam news. Regardless of whether any of these trades were attempted, it still would have been beneficial knowing the news ahead of trying a 'next' trade. Granted these kind of things don't happen every day, nor would any of these be method-based trades, but this is a response to 'watching cnbc' and knowing what is happening during the trading day.
That's a good point. I have often wondered if there is anyone who can explain the effects of that particular number on the stock market. Anyone?
I can't explain it, other to think that the markets started the recent trend up during economic weakness, and along with the employment report, numbers that are showing a 'worst is in', and then an economic improvement/expansion have been giving 'herd' reactions. from barrons... NAPM-Chicago Definition The National Association of Purchasing Management - Chicago compiles a survey and a composite diffusion index of manufacturing conditions in the Chicago area whose distribution of manufacturing firms mirrors the national distribution. Readings above 50 percent indicate an expanding factory sector. The NAPM - Chicago is considered a leading indicator of the ISM manufacturing index. Why Do Investors Care? Investors should track economic data like the NAPM - Chicago to understand the economic backdrop for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers a moderate growth environment that won't generate inflationary pressures. The NAPM - Chicago gives a detailed look at the Chicago region's manufacturing sector, how busy it is and where things are headed. Since manufacturing is a major sector of the economy, this report has a big influence on the markets. Some of the NAPM - Chicago's sub-indexes also provide insight on commodity prices and other clues on inflation. The Federal Reserve closely watches this report because when inflation signals are flashing, policymakers can reset the direction of interest rates. As a consequence, the bond market can be highly sensitive to this report.
Is news necessary? Simple: NO. Why? 1. How the hell are you gonna interpret news? 2. By the time you get the news it's too late anyway. Forget the news. It's all in the charts already. Make sure you keep your TV out of the office during RTH. You can watch whatever news you like after the closing bell. Any good trader will tell you that. I haven't used news for ages. ~Scientist
For me, even the trivial stuff I have (Briefing) makes a huge difference and it has made me money. It is not always necessary, but it is a terrific education to watch the markets react to news, and how. The hardest thing about news IMHO is to know what is priced in already and what is not when you want to take advantage of it on the shortest of time frames. For this, I was astonished how even something as trivial as Briefing can help. For some stuff, you need a first rate news feed, Bloomberg. An example of how there was an easy 7 handles to be gotten from a good news feed you have to look no further than this past Friday. The spoos took off from about 1010 around 12:30 CST. If you had a good news feed, you would have known that the UAW had just agreed to contract negotiations. The spoos IMMDIEATELY went vertical on this news, as they should assuming the news had not already leaked out and was already priced in. Unfortunately, that news did not come accross Briefing, so I was unaware of the trade. There is no question in my mind that news, if used skillfully, will add another $100k+/year to your bottom line. nitro
I suppose there is a semantics issue here with the word 'necessary', and to that I would have to answer no. However, change the word necessary to useable, and I would have to answer yes, thinking of numerous trades done that were involved with news/news reactions.
Agree. nitro brought some great points as to how news can be used to your advantage. However, you've got to already be nicely, that is very nicely profitable, plus experienced in news interpretation in order to justify an odd $25K/year subscription for a Bloomy. You're not gonna get the super-realtime news feed for a $5-a-month news subscription with eSignal. Not any of the other, more expensive news-subscriptions, either. You gotta shell out big in order to get a decent news feed you can really profit from. Better off putting your money into a decent squawk. More useful, more realistic, less distracting and a lot funnier. No news for me until I'm maybe making $1m a year. ~Scientist
it depends on your style of trading but for those of you who say that you can't make money off of news - you are wrong. if you have a real time feed, you can make money off of it. traders who say they can't, don't know how. there are ways to get it off the wire and react right away and there are ways to fade the bullshit ones. and i'm not talking about briefing.com. i'm speaking only of real time news. there are news traders out there that make a killing every day. they trade nothing but the news and scalp and can make more money then other types of traders.
Bloomberg terminal look goods. Suppose to have up to seconds news. I read somewhere, someone who has a bloomberg terminal, made a shit load of money when MO has then news. I will certainly get it if i can afford it.