News in Trading
Which news drop matter, and which don't.
This is a complex topic, and one that is asked repeatedly. I'll give you two categories. The first is news drops that should always be assumed to matter and therefore should not be ran through with any live algorithm.
The second is news drops which may matter, if it's a topic of particular concern at the moment.
Category 1: News that always matters in the current market climate.
Category 2: This news may matter depending on the exact current conditions.
But Anthony, how do I know when certain reports will matter or not??
Great question. The answer is "what are people concerned about?"
If every investing news site is crammed with questions about the housing market, then Housing Starts, Building Permits, and New Home Sales will be very volatile.
If they're concerned about people loosing jobs and a potential recession, then you bet your biscuits that Unemployment and Initial Jobless are going to be extremely traded events. But if all the news is fat and sassy about how great the economy is, then no one will care.
There are probably more than those listed above, but those are the ones I look for personally.
Your best bet is to just stay informed on the economy. A quick scan of your favorite site each day (investing.com is a good one) will help you stay up to date.
What do I do about news events?
Simple, turn off algos. Our algorithms are designed to trade during normal volatility and not during extreme events. These news events are heavy traded manually and mostly by HFT firms. The volatility becomes unpredictable and untradable for our algos. A good rule of thumb is off 5 minutes before and 5 minutes after for most, but some traders have different rules.
Hopefully that was helpful. Also - beware Trump talking. Sometimes he says nothing, sometimes he moves markets by huge amounts.
This is a complex topic, and one that is asked repeatedly. I'll give you two categories. The first is news drops that should always be assumed to matter and therefore should not be ran through with any live algorithm.
The second is news drops which may matter, if it's a topic of particular concern at the moment.
Category 1: News that always matters in the current market climate.
- FOMC meetings (Off entire day)
- FOMC minutes
- FOMC members speaking on policy topics
- CPI reports
- PPI reports
- GDP reports
- Non-Farm Payrolls
- JOLTS
- Retail Sales
- 10 Year Bond Auction Prices (Rising bond yields pull money from the stock market, and vice versa)
Category 2: This news may matter depending on the exact current conditions.
- Unemployment Rates (Recession concerns)
- Initial Jobless (Recession concerns)
- Industrial Output/Production (Recession concerns)
- Institute of Supply Management Reports (ISMs) (Recession concerns)
- Crude Oil Inventories (Recession concerns - oil buildup means no one is traveling)
- Housing Starts (Recession/Housing Market)
- Building Permits (Recession/Housing Market)
- New Home Sales (Recession/Housing Market)
- Durable Goods (Recession concerns)
But Anthony, how do I know when certain reports will matter or not??
Great question. The answer is "what are people concerned about?"
If every investing news site is crammed with questions about the housing market, then Housing Starts, Building Permits, and New Home Sales will be very volatile.
If they're concerned about people loosing jobs and a potential recession, then you bet your biscuits that Unemployment and Initial Jobless are going to be extremely traded events. But if all the news is fat and sassy about how great the economy is, then no one will care.
There are probably more than those listed above, but those are the ones I look for personally.
Your best bet is to just stay informed on the economy. A quick scan of your favorite site each day (investing.com is a good one) will help you stay up to date.
What do I do about news events?
Simple, turn off algos. Our algorithms are designed to trade during normal volatility and not during extreme events. These news events are heavy traded manually and mostly by HFT firms. The volatility becomes unpredictable and untradable for our algos. A good rule of thumb is off 5 minutes before and 5 minutes after for most, but some traders have different rules.
Hopefully that was helpful. Also - beware Trump talking. Sometimes he says nothing, sometimes he moves markets by huge amounts.