How to make money on news in the stock market

As you know, stock exchanges often experience sharp ups and downs in stock prices. It is often connected with various economic and political events taking place in the world. The value of securities can be affected by news about rising unemployment, decreasing inflation, the end of a high-profile lawsuit, the release of a new product, and changes in interest rates. Such events cause excitement, which, depending on the scale of the event, can be short-term or, on the contrary, long-term. The foreign exchange market reacts most actively to external factors.

Often, motor investors build their strategy based on publications in the mass media. The ability to analyze the market and use the obtained data in your work is very important. Trading on news can be very profitable. By adding the study of global economic data to charting, a trader can achieve significant profits.

What is news trading?

To understand how to trade on the news, it is important to understand the essence of this technique. It is based on the construction of a strategy based on the latest information about stocks and exchange rates. Traders’ attention is focused on the release of economic reports, reports on changes in company management and stock splits, unexpected geopolitical events. Lately, even social media posts can affect the stock market. Share prices have already fallen after Elon Musk’s tweets.

Some experts believe that the news trading strategy is a type of fundamental market analysis. It helps to assess the main economic, social and political factors affecting the value of a particular asset. But still, such a strategy has distinctive features. In particular, standard fundamental analysis is conducted in the long term, taking into account many factors, and forecasts change infrequently. Whereas a news-only perspective is short-term and its impact changes very quickly.

How to track news for trading?

On the one hand, watching media can be a simple task. This is what any person does every day. But on the other hand, if on the basis of these data it is planned to understand what is happening on the stock market, you need to know which news is better to trade.

In general, all messages are divided into two categories:

regular These are planned releases of new information, for example, publications in economic calendars, analytical selections, quarterly reports on the activities of companies. Specialists who constantly monitor such data can predict changes in share prices, make decisions on buying/selling assets, and avoid risks. It is especially important to understand what trends prevail in the country’s economy. For example, if it is expected that an increase in the inflation rate will be announced in a day or two, you can buy or sell assets in advance;

unexpected It is difficult to predict the appearance of such news. These include information about major disasters, the beginning of hostilities, terrorist attacks, developing geopolitical conflicts, and pandemics. The list can be continued, but all these events combine unexpected appearance, scale, impact on all aspects of life. Due to their suddenness, it is almost impossible to prepare for them, they cannot be predicted. In fact, these events provoke the appearance of the black swan effect. According to experts, the best strategy is to realize the inevitability of such events and develop a stable investment plan taking into account their inevitability.

To use template messages in your work, you should take care of a unique program in advance that collects unique information from primary sources (websites of news agencies, social media accounts), and have constant access to the exchange server. The publication of such data does not have a long-term impact on the market, so trading is carried out in the shortest possible time and most often with the help of “trading robots”.